Stocks on Bursa Malaysia closed weaker yesterday, despite bullish performance in most Asian markets, on continued profit taking in most heavyweight blue-chips in line with lower crude oil prices and weaker ringgit ahead of the Organization of Petroleum Exporting Countries (OPEC) meeting today in Vienna, Austria. The FBM KLCI shed 7.69 points or 0.44% to 1,741.48 after hovering between 1,739.92 and 1,749.20 throughout the day. Losers outpaced gainers by 434 to 377 while 320 counters were unchanged. Total volume slipped to 1.36 billion units worth RM1.68 billion from 1.48 billion units worth RM1.99 billion on Wednesday.
The FBM KLCI opened 7.15 points lower at 1,742.02 and plunged lower to hit the intra-day low of 1,739.92 two minutes after opening. The key index rebounded from the low and climbed higher gradually to touch the intra-day high of 1,749.20 just before noon. However, the rebound could not sustain and the index slipped lower on profit taking activity in the second half to close near the low of the day. Chart-wise, the FBM KLCI formed a black inverted hammer candlestick, a bottom reversal candlestick pattern, which indicates the appearance of buying interest initially but was later overcome by the selling pressure. Hence, the FBM KLCI is likely to stay in consolidation today with a bearish bias. Immediate downside support zone is at 1,739 to 1,732, while the overhead resistance zone is at 1,749 to 1,755.
MACD hooked downward slightly, but its histogram continued to contract upward, indicating a state of consolidation. RSI (14) hooked downward to 27 from 29.2, indicating pullback correction after a technical rebound a day earlier. Stochastic hooked downward slightly to 12.9 from 13.6, indicating pullback correction. Readings from the indicators showed that the FBM KLCI is in a state of consolidation, and is likely to further consolidate with a bearish bias.
The general trend of the FBM KLCI is still down. However, the price action of the FBM KLCI over the last three sessions showed that the key index has turned sideways range-bound for the near term as the index was fluctuating within a narrow range of 1,736 to 1,750. The key index formed a pennant chart pattern over the last four sessions which is a bearish continuation pattern if occur in a downtrend. Hence, the FBM KLCI is likely to continue its downtrend if the key index breaks the lower support of 1,732 with a potential downside targets of 1,723, follow by 1,718 and 1,706. On the broader market, turnover continued to shrink, indicating investors were staying sideline.
Overnight, the Dow fell 170.69 points or -0.94% to close at 17,905.58. Today, the FBMKLCI is likely to trade within a range of 1,728 to 1,758.
This week's expected range: 1718 – 1801
Today’s expected range: 1728 – 1758
Resistance: 1747, 1752, 1758
Support: 1728, 1734, 1737
Stocks to watch: ASIAPLY, CAP, DENKO, ENGTEX, FBMKLCI-HD, GASMSIA, HANDAL, HEVEA, KARYON, MIECO, MLGLOBAL, MPHBCAP, OMESTI, PANSAR, RCECAP, SCC, SEM, SUNZEN, SUPERMX, UCHITEC, WASEONG, WONG, YEELEE, YTLPOWR
Stock pick highlight: RCECAP (9296)
Last Price: RM0.355 +0.01
Support Level: RM0.345, RM0.32
Resistance Level: RM0.36, RM0.37, RM0.38, RM0.39, RM0.40, RM0.41, RM0.425, RM0.44, RM0.455, RM0.475, RM0.49
Entry Level: RM0.35 – RM0.36
RCECAP (9296) rebounded from its intra-day low of 0.345 to close higher at 0.355 after hitting the intra-day high of 0.36. Technically, the chart of RCECAP formed a bullish white candlestick with increased volume indicating buying interest came into the stock yesterday. 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 a strong increased in momentum to the upside and a buy signal. RSI (14) rose to 67.8 from 59.5, indicating the stock is turning bullish. Stochastic pulled back to 88.9 from 100 and is above the slow stochastic line, indicating the stock is consolidating. The medium and long term trend of RCECAP 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 RM0.36 will see an upside target of RM0.37, follow by RM0.38, RM0.39, RM0.40, RM0.41, RM0.425, RM0.44, RM0.455, RM0.475 and RM0.49.
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 (RM0.36). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM0.37, RM0.38, RM0.39 RM0.40, RM0.41), stop loss (RM0.34)
Mid Term – target price at (RM0.425, RM0.44, RM0.455, RM0.475, RM0.49), stop loss (RM0.315)
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