Stocks on Bursa Malaysia ended lower yesterday as traders stayed on the sidelines ahead of the two-day Federal Reserve (Fed) policy meeting which begins on Tuesday. At close, the benchmark FBM KLCI fell 4.52 points or 0.24% to 1,855.06 after fluctuating between 1,850.04 and 1,862.14 throughout the day. Market breadth was negative, with losers overwhelming gainers by 762 to 183, while 272 counters were unchanged. Total volume increased to 2.17 billion shares worth RM2.15 billion from Monday’s 2.12 billion shares worth RM2.05 billion.
Following the weakness on Wall Street overnight, the FBM KLCI opened 2.01 points higher at 1,861.59 and surged to the intra-day high of 1,862.14 briefly after opening. However, heavy profit taking activity dragged the key index lower for the rest of the day to hit the intra-day low of 1,850.04 just before closing, losing 9.54 points at its worst. Nonetheless, a last minute buying on selected blue-chips narrowed down the losses. Chart-wise, the FBM KLCI formed a bearish black candlestick which continued the downtrend from the previous day. Hence, the FBM KLCI is likely to further consolidate today. Immediate downside support zone is at 1,850 to 1,846, while the overhead resistance zone is at 1,862 to 1,867.
MACD slipped lower below the signal-line, indicating a state of consolidation. RSI (14) slid lower to 58.9 from 61.9, indicating continued correction and the short term relative of the FBM KLCI has retreated to a mildly bullish state from a bullish state. Stochastic, however, swung upward to 76 from 69, reflecting the intra-day rebound. Readings from the indicators showed that the FBM KLCI is in a state of correction and consolidation and is likely to further consolidate in the short term.
The trend of the FBM KLCI is still up as the key index continues to stay above the short, medium and long term moving averages. Nonetheless, for the near term, weakness is surfacing as the FBM KLCI has closed below the 5-day simple moving average (SMA), and it also pierced through the 10-day SMA on intra-day before rebounding to close above it. Hence, the FBM KLCI is likely to consolidate in the near term within a range of 1,836 to 1,867. On the broader market, heavy profit taking was seen in small caps and ACE market counters, marking an end to the recent rally on stocks that have made decent gains. Nevertheless, rotational play on different theme may take over.
Overnight, the Dow rose 72.17 points or 0.40% to close at 18,110.14. Today, the FBMKLCI is likely to trade within a range of 1,837 to 1,874.
This week's expected range: 1825 – 1886
Today’s expected range: 1837 – 1874
Resistance: 1861, 1867, 1874
Support: 1837, 1843, 1849
Stocks to watch: AEON, EATECH, KKB, KOSSAN, KPJ, LUSTER, NCB, OFI, OMEDIA, PARKSON, PRTASCO, SERSOL, TANCO, TEXCHEM, WZSATU
Stock pick highlight: AEON (6599)
Last Price: RM3.15 +0.03
Support Level: RM3.10, RM3.02
Resistance Level: RM3.16, RM3.21, RM3.26, RM3.34, RM3.45, RM3.52, RM3.61, RM3.70, RM3.78, RM3.91
Entry Level: RM3.14 – RM3.16
AEON (6599) rebounded from its intra-day low of 3.10 to close higher at 3.15 after hitting the intra-day high of 3.16. Technically, the chart of AEON 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 Ascending Triangle pattern breakout. MACD swung upward and is above the signal-line, and its histogram also extended upward, indicating an increased in momentum to the upside and a buy signal. RSI (14) rose to 63.8 from 59.7, indicating the stock is turning bullish. Stochastic rose to 97.7 from 95.1, and is above the slow stochastic line, indicated the stock is getting stronger after recent consolidation. The medium and long term trend of AEON is sideways, while the short term trend is up with the 5-day SMA staying above the 10-day SMA and both are above the 30-day SMA, and a confirmed breakout above RM3.16 will see an upside target of RM3.21, follow by RM3.26, RM3.34, RM3.45, RM3.52, RM3.61, RM3.70, RM3.78 and RM3.91.
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 (RM3.16). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM3.21, RM3.26, RM3.34, RM3.45, RM3.52), stop loss (RM3.09)
Mid Term – target price at (RM3.61, RM3.70, RM3.78, RM3.91), stop loss (RM3.01)
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