Stocks on Bursa Malaysia ended lower last Friday as foreign funds took profits in selected blue chips, led by Tenaga Nasional Berhad on concerns the state-controlled utility may take over 1Malaysia Development Berhad's (1MDB) power-generation assets. The local market bucked regional trends as most Asia Pacific bourses were in positive territory. The benchmark FBM KLCI fell 7.54 points or 0.42% to close at 1,787.5 after hovering between 1,780.11 and 1,798.46 throughout the day. On a weekly basis, the benchmark index shed 24.42 points from 1,811.92 previously. Losers outpaced gainers by 498 to 296, while 342 counters were unchanged. Total volume slipped to 1.59 billion units worth RM1.94 billion from 2.45 billion units worth RM2.28 billion on Thursday. Weekly turnover rose to 10.26 billion units worth RM9.94 billion from 6.66 billion units worth RM8.95 billion, previously.
The FBM KLCI opened last Monday 1.6 points higher at 1,813.52 and ended the day 11.58 points higher at the day’s high of 1,823.5, which is also the intra-week high, continuing the positive sentiments from previous Friday’s 2015 first quarter Gross Domestic Product (GDP) announcement. Bursa Malaysia saw heavy profit taking on Tuesday amid declining crude oil prices and a weaker ringgit against the US dollar. The market also reacted to news of the delay in the Refinery and Petrochemical Integrated Development’s refinery complex, which affected Petronas Gas’ shares, which saw the FBM KLCI falling 13.78 points to 1,809.72. The FBM KLCI rebounded on Wednesday to gain a marginal 0.39 points to close at 1,810.11 on lack of catalysts in line with most regional markets, as markets will look at the US Federal Reserve meeting minutes later in the night for any indication of an early rate hike. Thursday saw the FBM KLCI plunging 15.07 points to 1,795.04 after the unveiling of the 11th Malaysia Plan to steer the country towards a developed nation by 2020 did not provide the spark for the equities market, and the plunge continued into Friday which saw the FBM KLCI hitting an intra-week low of 1,780.11 before a last hour bargain hunting which lifted the key index to close off low.
On the weekly chart, the FBM KLCI formed a long black candlestick in a bearish engulfing position, indicating the resumption of heavy selling pressure after a technical rebound on the previous week. Hence, the FBM KLCI is likely to continue its downward pressure to slide lower in the coming week. On the daily chart, the FBM KLCI formed a bearish long black candlestick with a long lower shadow, which indicates late buying support amid heavy selling pressure for the day, and hence, the key index is likely to further consolidate today on continued profit taking. Immediate downside support zone is at 1,780 to 1,774, while the overhead resistance zone is at 1,798 to 1,810.
Weekly MACD slid lower and made a dead-cross over the signal-line, issuing a sell signal on the weekly perspective, indicating an increased in the weekly bearish momentum. Daily MACD continued to slide lower below the signal-line and also the zero-line, indicating an increased in the bearish momentum on the daily timeframe. Weekly RSI (14) slipped lower to 45 from 49.7, indicating the weekly relative strength of the FBM KLCI is turning mildly bearish from a neutral state. Daily RSI (14) was lower at 35.2 from 37.8, indicating the daily relative strength of the key index is turning more bearish. Weekly Stochastic slipped lower to 30.1 from 41.1, indicating continuation of the weakness and the weekly down cycle. Daily Stochastic was lower at 15.1 from 17.8, indicating further weakness was developing and continuation of the down cycle after a brief rebound. Readings from both the weekly and daily momentum indicators showed that the FBM KLCI is bearish on both the weekly and daily perspective. Thus, is likely to further consolidate or correct downward.
The trend of the FBM KLCI is down and bearish as the key index is closing below the short, medium and long term moving averages, and in particular, the key index has broken the critical support provided by the 120-day SMA at 1,794-point. Moreover, the FBM KLCI has closed below the lower supporting trend line of the short term uptrend channel starting from the pivot low of 1,671.82, and is also closing below the lower supporting trend line of the long term uptrend channel starting from the pivot low of 801.27 on October 28th, 2008 which painted a rather bearish picture of the FBM KLCI. From Elliott wave study, the FBM KLCI has completed its impulse wave-5 on April 27th after hitting the high of 1,867.53, and is now on impulse wave-C of a major corrective wave which has potential downside targets of 1,780, follow by 1,770, 1,752, 1,733, 1,725 and 1,707. The 38.2% Fibonacci Retracement (FR) support levels for the range measuring from the pivot low of 1,671.82 to the pivot high of 1,867.52 is at 1,792.76, and has been breached; follow by the 50% FR level at 1,769.67, the 61.8% FR level at 1,746.57 and the 76.4% FR level at 1,718.
Last Friday, the Dow fell 53.72 points or -0.29% to close at 18,232.02. This week, the FBMKLCI is likely to trade within a range of 1,727 to 1,866, and today, the FBMKLCI is likely to trade within a range of 1,760 to 1,816.
This week's expected range: 1727 – 1866
Today’s expected range: 1760 – 1816
Resistance: 1797, 1807, 1816
Support: 1760, 1770, 1778
Stocks to watch: DESTINI, EWEIN, FARLIM, FBMKLCI-HB, FBMKLCI-HD, FBMKLCI-HG, MICROLN, OCNCASH, PETRONM, UCHITEC, VS
Stock pick highlight: FARLIM (6041)
Last Price: RM0.665 +0.045
Support Level: RM0.635, RM0.605, RM0.575
Resistance Level: RM0.67, RM0.685, RM0.70, RM0.71, RM0.73, RM0.75, RM0. 775, RM0.79, RM0.80, RM0.85, RM0.89
Entry Level: RM0.66 – RM0.67
FARLIM (6041) rebounded from its intra-day low of 0.635 to close higher at 0.665 after hitting the intra-day high of 0.67. Technically, the chart of FARLIM formed a bullish white candlestick with increasing volume indicating strong buying interest came into the stock on Friday. It breaks out from the consolidation range forming an Ascending Triangle pattern breakout. MACD swung 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 74.7 from 62.5, indicating the stock is turning very bullish. Stochastic rose to 87.5 from 84.6 and is above the slow stochastic line, indicating increasing strength and continuation of the up cycle but is approaching the overbought level. The medium and long term trend of FARLIM is 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 RM0.67 will see an upside target of RM0.685, follow by RM0.70, RM0.71, RM0.73, RM0.75, RM0.775, RM0.79, RM0.80, RM0.85 and RM0.89.
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 (RM0.67). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM0.685, RM0.70, RM0.71, RM0.73, RM0.75), stop loss (RM0.63)
Mid Term – target price at (RM0.775, RM0.79, RM0.80, RM0.85, RM0.89), stop loss (RM0.60)
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