Stocks on Bursa Malaysia closed lower yesterday in line with the bearish regional stock market sentiment following a weaker overnight Wall Street performance after a lacklustre US corporate earnings report including from technology giants Apple Inc. and Microsoft. The FBM KLCI ended 6.66 points or 0.7% lower at 1,729.53, after fluctuating between 1,725.52 and 1,732.54 throughout the day. Losers edged gainers by 409 to 403 with 301 counters unchanged. Total volume stood at 1.66 billion units valued at RM1.68 billion against 1.66 billion units valued at RM1.51 billion on Tuesday.
Taking cue from the weak performance on Wall Street overnight, the FBM KLCI opened 5.07 points lower at 1,731.12 but rebounded to hit the intra-day high of 1,732.54 thirty minute after opening. However, the rebound found no follow through but profit taking activity continued to drag the key index lower for the rest of the day to hit the intra-day low of 1,725.52 before a last minute rebound which lifted the index off low. Chart-wise, the FBM KLCI formed a black spinning-top candlestick in bearish Harami position, in which the black spinning-top indicates uncertainty of market direction with a bearish bias, and the bearish Harami pattern points to a potential top reversal. Hence, the FBM KLCI is likely to stay in range-bound consolidation with a bearish bias. Immediate overhead resistance zone is at 1,732 to 1,736, while the downside support zone is at 1,725 to 1,722.
MACD was higher, but its histogram contracted downward, indicating a state of consolidation. RSI (14) hooked downward to 51.1 from 54.5, indicating a mild pullback of the key index to the neutral zone from a mildly bullish state. Stochastic was higher at 83.7 from 82, and showed sign of tapering, indicating continuation of the up cycle with a reduction in momentum. Readings from the indicators showed that the FBM KLCI is entering a state of consolidation.
The technical picture of the FBM KLCI still remained unchanged in that the near term trend is still up but the short term trend is sideways range-bound, while the medium to long term trend is still down. With the pullback yesterday, the FBM KLCI is likely to stay in consolidation with a downward bias for the near term until an upside breakout is seen, where a breakout of the 1,738 resistance will see the key index rallying higher towards the next resistance zone of 1,744 to 1,752, while a downside breakout of the 1,720 support will see the FBM KLCI falling towards the next lower support zone of 1,700 to 1,685.
Overnight, the Dow fell 68.25 points or -0.38% to close at 17,851.04. Today, the FBMKLCI is likely to trade within a range of 1,718 to 1,739.
This week's expected range: 1692 – 1748
Today’s expected range: 1718 – 1739
Resistance: 1732, 1736, 1739
Support: 1718, 1722, 1725
Stocks to watch: ALCOM, BARAKAH, CYBERT, DSONIC, DENKO, GESHEN, GPACKET, IBHD, K1, KAREX, KKB, KOMARK, JETSON, LIENHOE, LIONDIV, MMODE, MPAY, NIHSIN, OMESTI, PANPAGE, PRKCORP, POHUAT, PRLEXUS, REDTONE, SHH, SMRT, TA, TAKAFUL, TEOSENG, XOX, YONGTAI
Stock pick highlight: SHH (7412)
Last Price: RM1.35 +0.10
Support Level: RM1.25, RM1.12
Resistance Level: RM1.40, RM1.45, RM1.47, RM1.51, RM1.54, RM1.58, RM1.60, RM1.66, RM1.70, RM1.75, RM1.80
Entry Level: RM1.34 – RM1.36
SHH (7412) rebounded from its intra-day low of 1.25 to close higher at 1.35 after hitting the intra-day high of 1.40. Technically, the chart of SHH formed a bullish white long candlestick with increasing volume indicating strong buying interest came into the stock yesterday. It breaks out from the consolidation forming a Saucer pattern breakout. MACD surged higher and made a golden-cross over the zero-line, its histogram also extended upward strongly, indicating an increased in momentum to the upside and a buy signal. RSI (14) rose to 67.6 from 56.2, indicating the stock is turning bullish from mildly bullish. Stochastic rose to 76 from 66.7 and is staying above the slow stochastic line, indicating the stock is getting stronger after recent consolidation. The medium and long term trend of SHH is up, and the short term trend is also up with the 5-day SMA crossing over the 10-day SMA and the 30-day SMA, and a confirmed breakout above RM1.40 will see an upside target of RM1.45, follow by RM1.47, RM1.51 RM1.54, RM1.58, RM1.60, RM1.66, RM1.70, RM1.75, and RM1.80.
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 (RM1.40). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM1.45, RM1.47, RM1.51 RM1.54, RM1.58), stop loss (RM1.24)
Mid Term – target price at (RM1.60, RM1.66, RM1.70, RM1.75, RM1.80), stop loss (RM1.11)
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