Stocks on Bursa Malaysia closed mixed yesterday with the benchmark FBM KLCI pared earlier gains to close 2.23 points or 0.12% lower at 1,842.08, after range-bound trading with buying interest interspersed with profit taking in heavyweight stocks. The key index, which moved in a tight range of 6.59 points, had fluctuated narrowly between a low of 1,840.91 and 1,847.50. Gainers outnumbered losers by 467 to 378, with 319 counters unchanged. Total volume increased to 2.12 billion shares worth RM1.87 billion from 1.85 billion units worth RM1.8 billion on last Friday.
Continuing the correction from last Friday, the FBM KLCI opened 1.42 points lower at 1,842.89 and rebounded to hit the intra-day high of 1,847.50 at mid-morning. The key index took a breather and moved sideways range-bound for a major part of the day, and a last hour profit-taking dragged the index to hit the intra-day low of 1,840.91 before rebounding slightly to close off low. Chart-wise, the FBM KLCI formed a bearish black inverted hammer candlestick, a bottom reversal candlestick pattern which indicates a temporary bottom was seen at 1,840-point. However, a reversal still needs confirmation. Hence, the FBM KLCI is likely to stay in consolidation today with a downward bias. Immediate downside support zone is at 1,840 to 1,831, while the overhead resistance zone is at 1,847 to 1,856.
MACD slipped lower but is still above the signal-line, and its histogram also further contracted, indicating further loss in momentum amid a correction. RSI (14) was lower at 61.1 from 62.7, indicating further correction of the FBM KLCI but the relative strength is still in the bullish zone. Stochastic slipped lower to 79.3 from 85.8, indicating further weakening of the key index and continuation of the short term down cycle is expected. Readings from the indicators showed that the FBM KLCI is in a correction mode and is likely to further correct downward.
The near term trend of the FBM KLCI has turned down as the key index has now closed below the 5-day simple moving average (SMA) but found support at the 10-day SMA at 1,840-point level. However, if the FBM KLCI break below the 10-day SMA support at 1,840-point, it is likely to slide lower towards the next support zone of 1,837 to 1,831. Nonetheless, as of yesterday the short, medium and long term trend is still up, and hence, current weakness is being viewed as a healthy correction after Bull-run. On the broader market, rotational play on small caps and ACE market counters is still active in keeping the market alive.
Overnight, the Dow fell 80.61 points or -0.45% to close at 17,977.04. Today, the FBMKLCI is likely to trade within a range of 1,832 to 1,854.
This week's expected range: 1816 – 1875
Today’s expected range: 1832 – 1854
Resistance: 1846, 1850, 1854
Support: 1832, 1836, 1839
Stocks to watch: AMPROP, ASTINO, AWC, CARIMIN, CYL, DAYANG, EDEN, ENCORP, EWEIN, FLBHD, GPHAROS, HOHUP, INSAS, IRETEX, KKB, MIKROMB, MSPORTS, NOVAMSC, OSK, PENTA, PRIVA, PICORP, SAPRES, SEG, SLP, 3A, VSOLAR, YONGTAI, ZELAN
Stock pick highlight: AWC (7579)
Last Price: RM0.48 +0.03
Support Level: RM0.445, RM0.42
Resistance Level: RM0.495, RM0.505, RM0.525, RM0.55, RM0.575, RM0.60, RM0.65, RM0.70, RM0.78
Entry Level: RM0.48 – RM0.49
AWC (7579) rebounded from its intra-day low of 0.445 to close higher at 0.48 after hitting the intra-day high of 0.495. Technically, the chart of AWC formed a bullish white candlestick with increasing volume, indicating strong buying interest came into the stock yesterday. It breaks out from the consolidation range forming a Rectangle pattern breakout. MACD hooked upward but is still below the signal-line, and its histogram also further contracted upward, indicating an increased in momentum to the upside and a buy signal. RSI (14) rose to 74.7 from 67.7, indicating the stock is turning very bullish from a bullish state. Stochastic hooked upward to 73.6 from 70.7 but is still below the slow stochastic line, indicating the stock is rebounding after recent consolidation. The medium and long term trend of AWC is up, and the short term trend is turning up with the 5-day SMA closing above the 10-day SMA and is also above the 30-day SMA, and a confirmed breakout above RM0.495 will see an upside target of RM0.505, follow by RM0.525, RM0.55, RM0.575, RM0.60, RM0.65, RM0.70 and RM0.78.
Since the short term trend is bullish, day traders with shorter time frame perspective may ride on the short term bullishness and buy on breakout level (RM0.495). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM0.505, RM0.525, RM0.55, RM0.575), stop loss (RM0.44)
Mid Term – target price at (RM0.60, RM0.65, RM0.70, RM0.78), stop loss (RM0.41)
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