Stocks on Bursa Malaysia closed lower yesterday with the benchmark FBM KLCI fell into negative territory at close, weighed down by losses in Tenaga Nasional Bhd (TNB) and plantation-related counters. Losses on TNB and plantation-related counters eclipsed China’s stimulus news which had lifted regional market sentiment. China cut its interest rate for the third time in six months to bolster its flagging economy. Investors also remained cautious ahead of the euro zone finance ministers’ meeting scheduled for later of yesterday to discuss the directions of debt-laden Greece. At close, the FBM KLCI was 2.16 points or 0.12% lower at 1,805.49, after fluctuating between 1,803.57 and 1,814.24. Losers led gainers by 484 to 342, with 337 counters unchanged. Total volume was slightly higher at 1.54 billion units worth RM1.6 billion from Friday’s 1.52 billion units worth RM1.93 billion.
The FBM KLCI opened 1.57 points higher at 1,809.22 and climbed higher to hit the intra-day high of 1,814.24 in the first hour after opening. However, the rise could not sustain and the key index slipped lower on profit taking to move range-bound in the positive territory. The afternoon session saw increased selling pressure on selected blue-chips which sent the FBM KLCI to the intra-day low of 1,803.57 before rebounding slightly to close off low. Chart-wise, the FBM KLCI formed a black inverted hammer candlestick, a bottom reversal candlestick pattern which indicates consolidation with a bearish bias. Immediate downside support zone is at 1,803 to 1,795 with 1,800 being the critical psychological support level, while the immediate overhead resistance zone is at 1,814 to 1,818.
MACD slipped lower below the zero-line but its histogram was flat compared with the previous histogram, indicating a reduction in the downward momentum and consolidation. RSI (14) hooked downward slightly to 37.8 from 38.6, indicating a mild pullback correction, and the relative strength of the FBM KLCI is still bearish. Stochastic was lower at 2.4 from 5.8 and is deep into the stochastic oversold zone, indicating very weak index strength for the short term, and a technical rebound can be expected ahead. Readings from the indicators showed that the FBM KLCI is currently weak and bearish and is in a consolidation mode.
The technical picture of the FBM KLCI still remained bearish for the short and medium term as the key index continued to stay below the short and medium term moving averages, and the long term trend has turned sideways range-bound. For the near term, the FBM KLCI is likely to stay in consolidation mode with immediate downside support zone at 1,800 to 1,795. On the broader market, rotational play on small caps and ACE market counters has greatly slowed down as shown by the low trading volume, and the FBMSCAP and FBMACE indices also showed a state of consolidation.
Overnight, the Dow fell 85.94 points or 0.47% to close at 18,105.94. Today, the FBMKLCI is likely to trade within a range of 1,790 to 1,824.
This week's expected range: 1772 – 1856
Today’s expected range: 1790 – 1824
Resistance: 1812, 1818, 1824
Support: 1790, 1797, 1801
Stocks to watch: COMPLET, EDEN, IFCAMSC, IQGROUP, K1, KAWAN, KHEESAN, MILUX, OWG, PMHLDG, SAM, SAUDEE, SGB, TEXCHEM, TFP, WPRTS
Stock pick highlight: SAUDEE (5157)
Last Price: RM0.56 +0.03
Support Level: RM0.53, RM0.495
Resistance Level: RM0.57, RM0.59, RM0.60, RM0.63, RM0.65, RM0.675, RM0.70, RM0.725, RM0.75, RM0.80
Entry Level: RM0.385 – RM0.395
SAUDEE (5157) rebounded from its intra-day low of 0.53 to close higher at 0.56 after hitting the intra-day high of 0.57. Technically, the chart of SAUDEE formed a bullish white candlestick with increasing volume indicating buying interest came into the stock yesterday. It breakouts from the consolidation forming a Saucer pattern breakout. MACD surged upward and made a golden-cross over 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 72.3 from 65.1, indicating the stock is turning very bullish. Stochastic rose to 73.8 from 65.4, and is staying above the slow stochastic line, indicating the stock is turning stronger after recent consolidation. The medium and long term trend of SAUDEE is up, and the short term trend is also 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 RM0.57 will see an upside target of RM0.59, follow by RM0.60, RM0.63, RM0.65, RM0.675, RM0.70, RM0.725, RM0.75, and RM0.80.
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 (RM0.57). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM0.59, RM0.60, RM0.63, RM0.65, RM0.675), stop loss (RM0.525)
Mid Term – target price at (RM0.70, RM0.725, RM0.75, RM0.80), stop loss (RM0.49)
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