Stocks on Bursa Malaysia closed lower yesterday in tandem with regional peers with the benchmark FBM KLCI ended lower ahead of the interest rate decision by Bank Negara Malaysia in the evening. Late fund selling of heavyweights Tenaga Nasional and Sime Darby and other key index linked stocks dragged the FBM KLCI down nearly 16 points to its lowest since March 23. At close, the benchmark index was 15.87 points, or 0.87%, lower at 1,805.1, after hitting an intraday high of 1,818.79 earlier in the day. Losers led gainers 437 to 319, with 360 counters unchanged. Total volume fell to 1.55 billion shares worth RM1.97 billion from Wednesday’s 1.92 billion shares worth RM1.79 billion.
Taking cue from the weak overnight close on Wall Street, the FBM KLCI opened 12.65 points lower with a downside gap at 1,808.32 but rebounded to hit the intra-day high of 1,818.79 at midmorning. The rebound, however, could not last and the key index slipped lower to move sideways range-bound on continuous profit taking, and a last hour sell down on selected blue-chips led by TENAGA dragged the FBM KLCI to close at the lowest point of the day. Chart-wise, the FBM KLCI formed a bearish black inverted hammer candlestick, a bottom reversal candlestick pattern which indicates sign of reversal initially but was later overcome by the bears. Hence, the FBM KLCI is likely to further consolidate today, and a confirmation of reversal will require the key index to close above the 1,818-point level.
MACD continued to slide southward and made a dead-cross over the zero-line, issuing a sell signal and indicated that the FBM KLCI has turned bearish for the medium term. RSI (14) was lower at 37.2 from 42.7, indicating the key index has turned bearish for the short term. Stochastic was marginally lower at 10.3 from 11.2, indicating very weak index strength but is short term oversold. Hence, the FBM KLCI is likely to further consolidate but with a possibility of oversold rebound.
The short and medium term trend of the FBM KLCI is down and bearish as the key index is closing below the short term moving averages and has also closed below the medium term 50 and 60-day SMA. On top of that, the FBM KLCI has also close below the lower supporting trend line of the uptrend channel which measures from the pivot low of 1,671, on December 17th to the recent pivot high of 1,867 on April 27th, indicating the uptrend was over, and the FBM KLCI is likely to go into a deeper correction. With the bearish move yesterday, the FBM KLCI has also closed below the 200-day SMA, spelling a bearish outlook. Immediate moving average support is at 1,801, follow by 1,795 and 1,793 provided by the 150, 120 and 100-day SMA, and a break of this critical support zone will see the FBM KLCI plunging lower to test the pivot low support of 1,774.
Overnight, the Dow rebounded 82.08 points or 0.46% to close at 17,924.06. Today, the FBMKLCI is likely to trade within a range of 1,786 to 1,832.
This week's expected range: 1785 – 1883
Today’s expected range: 1786 – 1832
Resistance: 1814, 1823, 1832
Support: 1786, 1795, 1800
Stocks to watch: BPLANT, BRAHIMS, CONNECT, CHHB, CYPARK, ECS, GBGAQRS, GLBHD, GPA, HHGROUP, KGB, KULIM, LBS, MJPERAK, SALCON
Stock pick highlight: CYPARK (5184)
Last Price: RM1.95 +0.05
Support Level: RM1.90, RM1.83
Resistance Level: RM1.96, RM2.03, RM2.08, RM2.19, RM2.31, RM2.42, RM2.55, RM2.70, RM2.87, RM3.05
Entry Level: RM1.94 – RM1.96
CYPARK (5184) rebounded from its intra-day low of 1.90 to close higher at the intra-day high of 1.95. Technically, the chart of CYPARK formed a bullish white Marubozu candlestick with increasing volume indicating buying interest came into the stock yesterday. It reversed up from the consolidation forming a V-pattern reversal. MACD swung upward and made a golden-cross over the signal-line, and its histogram also extended upward, indicating a change in momentum to the upside and a buy signal. RSI (14) rose to 61.6 from 54.2, indicating the stock is turning bullish. Stochastic was higher at 69.4 from 47.2, and is staying above the slow stochastic line, indicating the stock is turning stronger after recent consolidation. The long term trend of CYPARK is down, but the medium term trend has turned up, and the short term trend is turning up with the 5-day SMA crossing above the 10-day SMA but both are above the 30-day SMA, and a confirmed breakout above RM1.96 will see an upside target of RM2.03, follow by RM2.08, RM2.19, RM2.31, RM2.42, RM2.55, RM2.70, RM2.87, and RM3.05.
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 (RM1.96). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM2.03, RM2.08, RM2.19, RM2.31, RM2.42), stop loss (RM1.89)
Mid Term – target price at (RM2.55, RM2.70, RM2.87, RM3.05), stop loss (RM1.82)
Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. The Stocks to watch is not a recommendation to buy or sell the particular stock, as it is only meant for graduates of the "Share Trading the Pro Way" course as case study. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.