Stocks on Bursa Malaysia closed slightly lower last Friday amid a sluggish performance in line with the poor performance on regional markets. The lack of domestic catalyst had led the trading volume to decline, as most retail investors preferred to remain on the sidelines. The FBM KLCI ended at 1,720.76, down 1.68 points, or 0.10%, after fluctuating between 1,712.49 and 1,721.45 throughout the day. On a weekly basis, the benchmark index was down 5.97 points or 0.34% from previous week’s 1,726.73. Gainers led losers by 423 to 416 with 305 counters unchanged. Total volume slipped to 1.74 billion units valued at RM1.5 billion from Thursday’s 1.76 billion units valued at RM1.68 billion. Weekly turnover rose to 8.35 billion units worth RM7.93 billion from last week’s 5.13 billion units worth RM5.87 billion.
The FBM KLCI opened last Monday after a long Hari Raya weekend 6.56 points higher at 1,733.29. It surged to hit the intra-day high of 1,735.75, gaining of 9.02 points at its best, before heavy profit taking activity dragged the key index lower for the rest of the day to end 2.60 points lower at 1,724.13. Tuesday saw the FBM KLCI rose 12.06 points to close at 1,736.19, the intra-week high, lifted by renewed buying support and gains in selected heavyweights, in sync with most Asian bourses which were modestly higher after an encouraging US earnings report boosted sentiment. However, the market took a turn on Wednesday with the FBM KLCI losing 6.66 points to 1,729.53 in line with the bearish regional stock market sentiment following a weaker overnight Wall Street performance after a lacklustre US corporate earnings report. The FBM KLCI continued its retreat on Thursday to lose 7.09 points to 1,722.44 on lack of market drivers amid the absence of positive local leads, and on Friday, the key index lost another 1.68 points to 1,720.76 after hitting an intra-day which is also an intra-week low of 1,712.49.
On the weekly chart, the FBM KLCI formed a dark-cloud-cover candlestick pattern which indicates heavy profit taking activity, and hence, the key index is likely to further consolidate in the coming week. On the daily chart, the FBM KLCI, however, formed a bullish white hammer candlestick, a bottom reversal candlestick pattern, which indicates the bears were initially strong in driving the index lower but the bulls later took control to recover most of the lost ground. Hence, the FBM KLCI might stage further rebound or stay in consolidation today. Immediate overhead resistance zone is at 1,721 to 1,731, while the downside support zone is at 1,712 to 1,707.
Weekly MACD was marginally lower but its histogram further contracted upward, indicating a reduction in the downward momentum and a state of consolidation. Daily MACD was marginally higher, but its histogram further contracted downward, indicating further loss in the upward momentum on the daily timeframe and a state of consolidation. Weekly RSI (14) hooked downward slightly to 38.4 from 39.5, indicating a mild pullback correction. Daily RSI (14) continued its slide to 46.9 from 47.7, indicating further weakening of the FBM KLCI in the mildly bearish zone. Weekly Stochastic hooked downward slightly to 19.7 from 21.7, indicating a mild pullback correction. Daily Stochastic, however, slipped lower to 74.5 from 83 and made a dead cross over the slow stochastic line, indicating an end to the recent up cycle and the possible beginning of a new down cycle on the daily timeframe. In short, reading from the weekly indicators showed that the FBM KLCI is in a state of consolidation, while readings from the daily indicators showed that the key index has turned mildly bearish and the possible beginning of another down cycle. Hence, the FBM KLCI is likely to further consolidate.
The technical picture of the FBM KLCI still remained very much unchanged in that the medium and long term trend is still down, while the short term trend is sideways range-bound with a downward bias, as the key index has closed below the short term moving averages but still stay within the range of 1,685 to 1,738, and a close below the mid-range level of 1,711 will see the FBM KLCI turning more bearish and may slide lower to test the lower support zone of 1,700 to 1,685. For the coming week, the FBM KLCI is expected to move sideways range-bound with a bearish bias.
Last Friday, the Dow fell 163.39 points or -0.92% to close at 17,568.39. This week, the FBMKLCI is likely to trade within a range of 1,686 to 1,759, and today, the FBMKLCI is likely to trade within a range of 1,706 to 1,730.
This week's expected range: 1686 – 1759
Today’s expected range: 1706 – 1730
Resistance: 1723, 1727, 1730
Support: 1706, 1709, 1715
Stocks to watch: ABRIC, APEX, ASIAPLY, BAHVEST, BCB, CAELY, CENTURY, EATECH, EKOWOOD, GDEX, HARBOUR, IBHD, IRCB, IRIS, JAKS, JAYCORP, JHM, KAWAN, KIALIM, L&G, LCTH, LEESK, MUH, OPCOM, PENSONI, RUBEREX, SCGM, SOLID, SOLUTN, SYCAL, TAKASO, TEXCHEM, VITROX, ZELAN
Stock pick highlight: LEESK (8079)
Last Price: RM0.335 +0.035
Support Level: RM0.30, RM0.28
Resistance Level: RM0.345, RM0.36, RM0.38, RM0.40, RM0.42, RM0.455, RM0.47, RM0.49, RM0.51, RM0.525, RM0.545
Entry Level: RM0.33 – RM0.34
LEESK (8079) rebounded from its intra-day low of 0.30 to close higher at the intra-day high of 0.335. Technically, the chart of LEESK formed a bullish white Marubozu candlestick with increasing volume indicating strong buying interest came into the stock on Friday. It breaks out from the consolidation forming an Ascending Triangle 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 71.3 from 63.2, indicating the stock is turning very bullish from bullish. Stochastic hooked upward to 89.1 from 85 and made a golden-cross over the slow stochastic line, issuing a stochastic buy signal, and indicated the stock is turning stronger after recent consolidation. The medium and long term trend of LEESK 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 RM0.345 will see an upside target of RM0.36, follow by RM0.38, RM0.40, RM0.42, RM0.455, RM0.47, RM0.49, RM0.51, RM0.525, and RM0.545.
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 (RM0.345). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM0.36, RM0.38, RM0.40 RM0.42, RM0.455), stop loss (RM0.295)
Mid Term – target price at (RM0.47, RM0.49, RM0.51, RM0.525, RM0.545), stop loss (RM0.275)
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