Stocks on Bursa Malaysia closed broadly lower yesterday with the benchmark FBM KLCI ended the day in negative territory on selling activities in selected heavyweights led by Petronas-related counters. The weaker Bursa Malaysia was in tandem with regional peers, following a selloff in global sovereign bonds. At close, the index was 6.45 points or 0.35% lower at 1,820.97 after fluctuating between 1,813.01 and 1,824.21 throughout the day. Losers led gainers 454 to 353, with 312 counters unchanged. Total volume rose to 1.92 billion shares worth RM1.79 billion from 1.82 billion shares worth RM1.93 billion on Tuesday.
Taking cue from the weakness on Wall Street overnight, the FBM KLCI opened 3.21 points lower at 1,824.21, the intra-day high level, and slipped lower on selling pressure in selected heavyweights. The key index hit the intra-day low of 1,813.01 at mid-afternoon, losing 14.41 points at its worst but rebounded in the last hour on bargain hunting to close off low. Chart-wise, the FBM KLCI formed a black hammer candlestick, a key bottom reversal candlestick pattern which indicates buying support at current level. However, a confirmed reversal will require the FBM KLCI to at least close above the previous candlestick high of 1,830-point. Hence, the FBM KLCI is likely to further consolidate today until a confirmed reversal signal is seen. Immediate downside support zone is at 1,818 to 1,813 with the critical psychological support at 1,800-point, and the immediate overhead resistance zone is at 1,824 to 1,830.
MACD and its histogram continued to slide southward, indicating an increased in the bearish momentum. RSI (14) hooked downward to 42.7 from 45.3, indicating weakness on profit taking after a technical rebound on the previous day, and the key index is turning more bearish in the mildly bearish zone. Stochastic, showed sign of tapering and was marginally lower at 11.2 from 12.2, indicating a reduction in the downward momentum and is oversold for the short term. Readings from the indicators showed that the FBM KLCI is short term bearish but is oversold on the stochastic, and hence is likely to further consolidate with a slight possibility of a rebound.
The technical picture of the FBM KLCI still remained very much unchanged in that the short term trend of the FBM KLCI still remained down as the key index continued to close below the short term 5, 10, 15, 20 and 30-day simple moving average (SMA), and the medium term trend is still up with the key index continued to close above the 60-day SMA, while the long term trend has turned sideways. Price action of the FBM KLCI over the last two sessions showed that the key index is finding some buying support from bargain hunters below the immediate support of 1,818-point, and hence, the FBM KLCI is likely to further consolidate above the psychological support level of 1,800-point until a confirmed reversal is seen.
Overnight, the Dow fell 86.22 points or 0.48% to close at 17,841.98. Today, the FBMKLCI is likely to trade within a range of 1,803 to 1,835.
This week's expected range: 1785 – 1883
Today’s expected range: 1803 – 1835
Resistance: 1825, 1830, 1835
Support: 1803, 1808, 1814
Stocks to watch: ALAM, ARMADA, BARAKAH, COASTAL, DAYANG, KEN, KNM, MATRIX, MBMR, MUHIBAH, PARKSON, SANBUMI, SKPETRO, SASBADI, SGB, UMSNGB, WCT, XINQUAN, ZELAN
Stock pick highlight: ZELAN (2283)
Last Price: RM0.37 +0.03
Support Level: RM0.335, RM0.305
Resistance Level: RM0.375, RM0.385, RM0.40, RM0.41, RM0.43, RM0.445, RM0.46, RM0.48, RM0.51, RM0.56
Entry Level: RM0.365 – RM0.375
ZELAN (2283) rebounded from its intra-day low of 0.34 to close higher at the intra-day high of 0.37. Technically, the chart of ZELAN formed a bullish white Marubozu candlestick with increasing volume indicating strong buying interest came into the stock yesterday. It reversed up from the consolidation forming a Triangle pattern breakout. MACD hooked upward but is still below the signal-line, and its histogram also contracted upward significantly, indicating a change in momentum to the upside and a buy signal. RSI (14) rose to 65.5 from 49.6, indicating the stock is turning bullish. Stochastic swung upward to 40 from 22.6, and made a golden-cross over the slow stochastic line, issuing a stochastic buy signal and indicating the stock is turning strong after recent consolidation. The medium and long term trend of ZELAN is up, and the short term trend is turning up with the 5-day SMA still below the 10-day SMA but both are above the 30-day SMA, and a confirmed breakout above RM0.375 will see an upside target of RM0.385, follow by RM0.40, RM0.41, RM0.43, RM0.445, RM0.46, RM0.48, RM0.51, and RM0.56.
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 (RM0.375). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM0.385, RM0.40, RM0.41, RM0.43, RM0.445), stop loss (RM0.33)
Mid Term – target price at (RM0.46, RM0.48, RM0.51, RM0.56), stop loss (RM0.30)
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