Stocks on Bursa Malaysia closed lower last Thursday for the fourth consecutive day on profit taking ahead of the long weekend for Labour Day and Wesak Day on Friday and Monday respectively. At close, the benchmark FBM KLCI fell 24.66 points or 1.34% to 1,818.27 after fluctuating between 1,818.27 and 1,841.06 throughout the day. On a Friday-to-Thursday basis, the benchmark FBM KLCI declined 44.31 points or 2.38% from 1,862.58 on previous Friday. Gainers led losers by 422 to 372, while 329 counters were unchanged. Total volume decreased to 1.52 billion shares worth RM2.17 billion from Wednesday’s 1.59 billion shares worth RM1.9 billion. Weekly turnover declined to 7.40 billion units worth RM8.27 billion from last Friday’s 12.99 billion units worth RM10.42 billion.
The FBM KLCI was in a correction mode last week, where it opened last Monday 2.11 points higher at 1,864.69 and climbed higher to hit the intra-day high which is also the intra-week high of 1,867.53. However, the rise could not sustain and the key index fell on persistent profit taking for the rest of the day to close 3.0 points lower at 1,859.58 near the day’s low. In the absence of compelling leads, and with the recent global stocks rally appearing to have slow down, while the bulls took a breather amid renewed worries over Greece, and investors turning cautious awaiting for the outcome from the Federal Reserve’s policy meeting, the FBM KLCI continued to slide southward on Tuesday, losing 4.52 points to 1,855.06, and another 12.13 points to 1,842.93 on Wednesday. Selling pressure increased significantly on Thursday ahead of the long weekend which saw the FBM KLCI losing another 24.66 points to close at the week’s low of 1,818.27.
On the weekly chart, the FBM KLCI formed a long black candlestick in a bearish engulfing position, a top reversal candlestick pattern which indicates heavy selling pressure for the week, and hence, the FBM KLCI is likely to further correct downward or consolidate in the coming holiday-shortened week. On the daily chart, the FBM KLCI formed a bearish long black candlestick with a downside runaway gap which indicates selling down in an almost panic situation. Thus, the FBM KLCI is likely to further correct downward on follow through selling. Immediate downside support zone is at 1,813 to 1,800, while the overhead resistance zone is at 1,823 to 1,841.
Weekly MACD hooked downward but is still above the signal-line, and its histogram contracted downward significantly, indicating a change in the weekly momentum from up to down. Daily MACD and its histogram slipped lower substantially, indicating a significant increase in bearish momentum. Weekly RSI (14) fell to 50.8 from 60.6, indicating a significant change in the weekly relative strength from a bullish state to a neutral state. Daily RSI (14) slipped lower to 40.6 from 51.6, indicating the FBM KLCI has turned bearish for the short term. Weekly Stochastic turned downward to 82.5 from 94.1 and made a dead-cross over the slow stochastic line, issuing a weekly stochastic sell signal, and indicated an end to the weekly up cycle. Daily Stochastic slipped lower to 22.6 from 51.8, approaching the short term oversold zone, indicating very weak index strength and continuation of the daily down cycle, and a rebound is imminent. In short, readings from the weekly indicators showed that a major correction of the FBM KLCI has just started on the weekly perspective. And readings from the daily indicators showed that the FBM KLCI has turned bearish for the short term. Hence, is likely to further correct downward or consolidate.
The short term trend of the FBM KLCI has turned down as the key index has now closed below the short term moving averages, while the medium term trend is still up and the long term trend is turning sideways. The FBM KLCI found support at the 200-day SMA as it closed right on it and a rebound may be expected. For the coming holiday-shortened week, the FBM KLCI is likely to stay in consolidation with the possibility of a technical rebound as the key index was slightly oversold for the short term. On the broader market, rotational play on small caps and ACE market is taking a breather as the volume has drastically reduced.
Overnight, the Dow rose 46.34 points or 0.26% to close at 18,024.06. This week, the FBMKLCI is likely to trade within a range of 1,785 to 1,883, and today, the FBMKLCI is likely to trade within a range of 1,787 to 1,863.
This week's expected range: 1785 – 1883
Today’s expected range: 1787 – 1863
Resistance: 1833, 1848, 1863
Support: 1787, 1803, 1810
Stocks to watch: AEON, APFT, BJAUTO, EDGENTA, ESCERAM, EWEIN, FIMACOR, GBGAQRS, GPA, IFCAMSC, JAKS, KINSTEL, KKB, PARAMON, RESINTC, SERSOL, TAMBUN, UOADEV, WCT, WPRTS
Stock pick highlight: APFT (5194)
Last Price: RM0.21 +0.01
Support Level: RM0.195, RM0.185
Resistance Level: RM0.235, RM0.25, RM0.27, RM0.285, RM0.30, RM0.325, RM0.34, RM0.37, RM0.425, RM0.475
Entry Level: RM0.21 – RM0.215
APFT (5194) rebounded from its intra-day low of 0.195 to close higher at the intra-day high of 0.21. Technically, the chart of APFT formed a bullish white candlestick indicating buying demand. It breaks out from the consolidation range forming a Rectangle pattern breakout. MACD hooked upward but is below the signal-line, and its histogram also contracted upward, indicating a change in momentum to the upside and a buy signal. RSI (14) rose to 66.8 from 60.8, indicating the stock is getting more bullish. Stochastic hooked upward to 66.7 from 53.3, and made a golden-cross over the slow stochastic line, issuing a stochastic buy signal and indicating the stock is turning stronger after recent consolidation. The long term trend of APFT is up, while the medium and short term trend is up with the 5-day SMA crossing above the 10-day SMA and both are above the 30-day SMA, and a confirmed breakout above RM0.235 will see an upside target of RM0.25, follow by RM0.27, RM0.285, RM0.30, RM0.325, RM0.34, RM0.37, RM0.425, and RM0.475.
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 (RM0.235). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM0.235, RM0.25, RM0.27, RM0.285, RM0.30), stop loss (RM0.19)
Mid Term – target price at (RM0.325, RM0.34, RM0.37, RM0.425, RM0.475), stop loss (RM0.18)
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