Stocks on Bursa Malaysia rebounded to close higher last Friday with the benchmark FBM KLCI closed slightly higher, lifted by sustained buying momentum in heavyweights, led by Maybank and Sime Darby, in line with its regional peers due to a stabilising global bond market. At close, the FBM KLCI was 2.55 points or 0.14% higher at 1,807.65, after fluctuating between 1,805.35 and 1,814.28 throughout the day. On a weekly basis, the FBM KLCI fell 10.62 points from 1,818.27 on previous Thursday. Gainers led losers 461 to 315, with 325 counters unchanged. Total volume was slightly lower at 1.52 billion shares worth RM1.93 billion from Thursday’s 1.55 billion shares worth RM1.97 billion. Weekly turnover for the four trading day week declined to 6.81 billion units, worth RM7.63 billion, from 7.40 billion units, worth RM8.27 billion, recorded the previous week.
The FBM KLCI was in an extended correction mode last week where the key index opened last Tuesday 12.05 points higher at 1,830.32, playing catch-up after an extended long weekend, and the FBM KLCI surged to the intra-day which is also the intra-week high of 1,830.90 briefly after opening. However, profit taking activity pushed key index lower from the high to hit the intra-day low of 1,818.16 before some last hour bargain hunting lifted the FBM KLCI to close 9.15 points higher at 1,827.42. Tuesday saw renewed selling pressure in tandem with regional peers, following a selloff in global sovereign bonds, with the FBM KLCI losing 6.45 points to 1,820.97. Selling pressure continued into Thursday which saw the key index losing 15.87 points to 1,805.1, ahead of the interest rate decision by Bank Negara Malaysia in the evening. The FBM KLCI staged a technical rebound on Friday to end 2.55 points higher at 1,807.65.
On the weekly chart, the FBM KLCI formed a bearish black candlestick which continued the downtrend from the previous week, indicating a bearish situation. Nonetheless, the range for last week was only about half of the previous week, indicating a big reduction in the bearish momentum, and hence, the FBM KLCI is likely to further correct downward or consolidate in the coming week. On the daily chart, the FBM KLCI formed a white inverted hammer candlestick, a bottom reversal candlestick pattern which indicates the appearance of buying support and a temporary bottom was seen at the 1,805-point level. Hence, the FBM KLCI is likely to stage a technical rebound today if the bargain hunters continue to pick up blue-chips which were beaten down over the last two weeks. Immediate downside support zone is at 1,805 to 1,795 with 1800 being the critical psychological support level, while the overhead resistance zone is at 1,814 to 1,830.
Weekly MACD continued to slide lower but is still above the signal-line as well as the zero-line, indicating a short term correction. However, daily MACD continued to slide lower below the zero-line, indicating an increased in the bearish momentum. Weekly RSI (14) slipped lower to 48.8 from 50.9, indicating the weekly relative strength of the FBM KLCI has turned mildly bearish. Daily RSI (14) hooked upward to 38.6 from 37.2, indicating a mild technical rebound and the daily relative strength of the FBM KLCI is still bearish. Weekly Stochastic slipped lower to 63.8 from 82.5, indicating a continuation of weakness and down cycle on the weekly perspective. Daily Stochastic was lower at 5.8 from 10.3, which indicates the FBM KLCI was deeply oversold and a technical rebound is imminent. Readings from the weekly indicators showed that the FBM KLCI is undergoing a correction and has turned mildly bearish, while readings from the daily indicators showed that the FBM KLCI is bearish and deeply oversold, and a technical rebound is expected ahead.
The short term trend of the FBM KLCI is down and bearish as the key index continued to stay below the short term moving averages, and the medium term trend has also just turned bearish as the FBM KLCI has closed below the 60-day simple moving average (SMA), while the long term trend of the FBM KLCI has turned sideways range-bound as the key index bound on top by a cluster of long term moving average but also support below by the 150, 120 and 100-day SMA which provide the critical downside support zone at 1,800 to 1,794. And a break of the moving average support at 1,794 will likely see the FBM KLCI sliding lower toward the next lower support at 1,774, the pivot low formed on March 16th. The mid-range support for the range measuring from the pivot low of 1,671.82 to the pivot high of 1,867.53 is at 1,769.67, which is a critical long term support line, and a break of this level will see the FBM KLCI turning really bearish. For the coming week, the FBM KLCI is likely to move range-bound with mild upward bias.
Last Friday, the Dow rose 267.05 points or 1.49% to close at 18,191.11. This week, the FBMKLCI is likely to trade within a range of 1,772 to 1,856, and today, the FBMKLCI is likely to trade within a range of 1,794 to 1,823.
This week's expected range: 1772 – 1856
Today’s expected range: 1794 – 1823
Resistance: 1812, 1818, 1823
Support: 1794, 1800, 1803
Stocks to watch: APPASIA, CIHLDG, DAYANG, EWEIN, FIMACOR, GADANG, GRANFLO, LCTH, LFECORP, LONBISC, MAGNA, MATRIX, MMSV, PENTA, PERDANA, PRTASCO, SCIB, SASBADI, SERSOL, SKPRES, SLP, SMTRACK, TOMYPAK
Stock pick highlight: SERSOL (0055)
Last Price: RM0.39 +0.05
Support Level: RM0.34, RM0.305
Resistance Level: RM0.40, RM0.42, RM0.44, RM0.46, RM0.485, RM0.50, RM0.53, RM0.56, RM0.585, RM0.62
Entry Level: RM0.385 – RM0.395
SERSOL (0055) rebounded from its intra-day low of 0.34 to close higher at the intra-day high of 0.39. Technically, the chart of SERSOL formed a bullish white candlestick with increasing volume indicating buying interest came into the stock on Friday. It breakouts from the consolidation forming a Flag pattern reversal. MACD surged upward and is above the signal-line, and its histogram also extended upward strongly, indicating an increased in momentum to the upside and a buy signal. RSI (14) rose to 76.6 from 68.7, indicating the stock is turning very bullish. Stochastic hooked upward to 86.6 from 79.5, and is staying above the slow stochastic line, indicating the stock is turning stronger after recent consolidation. The long term trend of SERSOL is sideways, but the medium term trend has turned up, and the short term trend is also 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 RM0.40 will see an upside target of RM0.42, follow by RM0.44, RM0.46, RM0.485, RM0.50, RM0.53, RM0.56, RM0.585, and RM0.62.
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 (RM0.40). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM0.40, RM0.42, RM0.44, RM0.46, RM0.485), stop loss (RM0.335)
Mid Term – target price at (RM0.50, RM0.53, RM0.56, RM0.585, RM0.62), stop loss (RM0.30)
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