Stocks on Bursa Malaysia ended lower yesterday on late selling on selected heavyweights. The local stock market has been trading sideways this week on lack of market drivers amid the absence of positive local leads. The FBM KLCI finished 7.09 points or 0.41% lower at 1,722.44, after fluctuating between 1,722.44 and 1,731.18 throughout the day. Gainers outnumbered losers by 491 to 317 with 320 counters unchanged. Total volume rose to 1.76 billion units valued at RM1.68 billion from Wednesday’s 1.66 billion units valued at RM1.68 billion.
The FBM KLCI opened 0.04 of a point higher at 1,729.57 and climbed higher to touch the intra-day high of 1,731.18 fifteen minutes after opening. However, profit taking activity dragged the key index lower and move sideways range-bound for a major part of the day, and a last minute sell down on selected heavyweights pushed the FBM KLCI to the lowest point of the day. Chart-wise, the FBM KLCI formed a bearish black candlestick which indicates the bears were in control for the day, and hence, the key index is likely to slide lower today on continued selling pressure. Immediate downside support zone is at 1,720 to 1,707, while the overhead resistance zone is at 1,731 to 1,736.
MACD was marginally higher and was tapering off, while its histogram further contracted downward, indicating further reduction in the upward momentum or an increased in the bearish momentum. RSI (14) slipped lower to 47.7 from 51.1, indicating the relative strength of the FBM KLCI has turned mildly bearish from a neutral state. Stochastic hooked downward slightly to 83 from 83.7, indicating a pullback correction and the possible end of the short term up cycle. Readings from the indicators showed that the momentum of the FBM KLCI is starting to turn weak, and further weakness is expected ahead.
The general technical picture of the FBM KLCI still remained very much the same in that the short term trend is sideways and the medium and long term trend is down. Nonetheless, with the bearish move yesterday, the FBM KLCI has closed below the 5-day simple moving average (SMA), indicating a possible near term trend change to the downside. The key index may slide lower to test the short term moving average support zone of 1,721 to 1,718 provided by a cluster of 10, 15, 20 and 30-day SMA and a break of this immediate moving average support zone will see the FBM KLCI sliding lower to the 1,707 to 1,700 support zone.
Overnight, the Dow fell 119.12 points or -0.67% to close at 17,731.92. Today, the FBMKLCI is likely to trade within a range of 1,710 to 1,739.
This week's expected range: 1692 – 1748
Today’s expected range: 1710 – 1739
Resistance: 1728, 1734, 1739
Support: 1710, 1716, 1719
Stocks to watch: AWC, BAHVEST, BRIGHT, CAELY, CHINWEL, DNONCE, E&O, ECOWLD, EG, EURO, EWEIN, GKENT, GHLSYS, GUH, HEXZA, HHGROUP, IJACOBS, INIX, IQGROUP, KIMHIN, LONBISC, MBSB, MKH, MUDA, MYEG, NAIM, OCK, OKA, OLDTOWN, OMEDIA, OWG, REXIT, SCNWOLF, SMTRACK, SUCCESS, SUNWAY, SUNZEN, SYF, WELLCAL, YOCB
Stock pick highlight: GKENT (3204)
Last Price: RM1.48 +0.11
Support Level: RM1.37, RM1.25
Resistance Level: RM1.51, RM1.54, RM1.57, RM1.61, RM1.64, RM1.68, RM1.73, RM1.78, RM1.81, RM1.93, RM2.04
Entry Level: RM1.47 – RM1.49
GKENT (3204) rebounded from its intra-day low of 1.37 to close higher at 1.48 after hitting the intra-day high of 1.51. Technically, the chart of GKENT 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 Flag pattern breakout. MACD surged higher 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 70.8 from 62.1, indicating the stock is turning very bullish from bullish. Stochastic hooked upward to 84.3 from 81.3 and is staying above the slow stochastic line, indicating the stock is turning stronger after recent consolidation. The medium and long term trend of GKENT is sideways to up, and the short term trend is 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 RM1.51 will see an upside target of RM1.54, follow by RM1.57, RM1.61, RM1.64, RM1.68, RM1.73, RM1.78, RM1.81, RM1.93, and RM2.04.
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 (RM1.51). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM1.54, RM1.57, RM1.61 RM1.64, RM1.68), stop loss (RM1.36)
Mid Term – target price at (RM1.73, RM1.78, RM1.81, RM1.93, RM2.04), stop loss (RM1.24)
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