Stocks on Bursa Malaysia closed lower last Friday with the benchmark FBM KLCI closed 0.39 point or 0.02% lower to 1,734.37, after moving within a narrow range of between 1,732.59 and 1,740.99, with buying interest interspersing with mild profit taking. On a weekly basis, the benchmark index shed 10.96 points or 0.63% from 1,745.33. Decliners outpaced gainers by 442 to 310 with 325 counters unchanged. Total volume contracted to 1.14 billion units worth RM1.19 billion from 1.42 billion units worth RM1.71 billion on Thursday. Weekly turnover declined to 6.36 billion units worth RM7.29 billion from 9.07 billion units worth RM11.63 billion previously.
The FBM KLCI opened last Monday 9.26 points lower at 1,736.07 and plunged to the intra-day low of 1,727.01, losing 18.32 points at its worst, before rebounding to close 5.88 points lower at 1,739.45 as the upbeat US jobs growth fuels talk of a Federal Reserve (Fed) rate hike. Tuesday saw the FBM KLCI eased another 10.40 points to close at 1,729.05 in line with most Asian stock markets which sank in a sea of red as US jobs data bolstered expectations of an interest rate increase by the Fed before year-end. The FBM KLCI rebounded on Wednesday to close 6.58 points higher at 1,735.63 despite the bearish overnight performance on Wall Street and mixed regional peers. However, Thursday saw the benchmark index retreated 0.87 point to 1,734.76 on selling pressure in telecommunication heavyweights after opening 9.14 points higher at 1,744.77, and the key index continued to consolidate on Friday closing another 0.39 points lower at 1,734.37.
On the weekly chart, the FBM KLCI formed a black spinning-top candlestick which indicates uncertainty of market direction and consolidation. Hence, the FBM KLCI is likely to stay in range-bound consolidation in the coming week. On the daily chart, the key index formed a bearish black candlestick after opening at the intra-day high level, indicating sellers were dominant for the day, and hence, the FBM KLCI is likely to further consolidate today. Immediate downside support zone is at 1,732 to 1,727, while the overhead resistance zone is at 1,740 to 1,750.
Weekly MACD and its histogram continued to slide lower, indicating further increased in the bearish momentum on the weekly perspective. However, daily MACD continued to rise and is approaching the signal-line, indicating further reduction of the bearish momentum on the daily timeframe. Weekly RSI (14) slipped lower to 36.6 from 38.2, indicating further loss in the weekly relative strength in the bearish zone, while daily RSI (14) was marginally lower at 29.7 from 29.8, indicating consolidation in the very bearish or oversold zone. Weekly Stochastic slipped lower to 5.5 from 7.9, indicating a very weak state of the FBM KLCI and oversold on the weekly chart. However, daily Stochastic was higher at 13.1 from 8.5, indicating mild improvement in the key index’s strength amid consolidation. In short, readings from the weekly indicators showed that the FBM KLCI is still weak and bearish, while the daily indicators showed that the FBM KLCI is consolidating with a reduction in the bearish momentum. Hence, the FBM KLCI is likely to further consolidate in the coming week with the possibility of an oversold rebound.
The trend of the FBM KLCI still remained down and bearish as the key index suffered extended losses for the fourth straight week amid foreign liquidation pressure. Nonetheless, the downward move had eased somewhat, thanks to the light bargain hunting interest by local institutions in selected blue-chips, thus providing the cushion. For the coming week, the FBM KLCI is likely to stay in sideways range-bound consolidation within a range of 1,727 to 1,745 if the local institutions continue with the mid-year window dressing activity. Nevertheless, a further break of the immediate support at 1,727 will likely see the FBM KLCI sliding lower towards the 1,700-point psychological support level, while a reversal will require the FBM KLCI to at least close above the 1,752-point level.
Last Friday, the Dow fell 140.53 points or -0.78% to close at 18,898.84. This week, the FBMKLCI is likely to trade within a range of 1,708 to 1,762, and today, the FBMKLCI is likely to trade within a range of 1,722 to 1,749.
This week's expected range: 1708 – 1762
Today’s expected range: 1722 – 1749
Resistance: 1739, 1744, 1749
Support: 1722, 1727, 1730
Stocks to watch: APPASIA, BTM, DESTINI, FBMKLCI-HD, FBMKLCI-HI, HOVID, IRCB, LEONFB, SENDAI, ULICORP
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