Stocks on Bursa Malaysia ended lower yesterday on profit taking, pressured by some of the same blue chips that lifted the index before the closing bell on Monday. The selling occurred throughout the trading session, prompted by a weaker ringgit and discouraging China stock market performance which led most regional markets to be on negative territory. The ringgit was quoted at 3.8520/8550 against the US dollar at the close yesterday. At close, the FBM KLCI fell 20.46 points, or 1.17%, to 1,723.73 after fluctuating between 1,722.91 and 1,730.81 throughout the day. Losers outnumbered gainers by 549 to 261 with 300 counters unchanged. Total volume rose to 1.34 billion units valued at RM1.53 billion from 1.32 billion units valued at RM1.25 billion on Monday.
Taking Following the weak performance on Wall Street overnight, the FBM KLCI opened 14.1 points lower at 1,730.09 and rebounded to the intra-day high of 1,730.81 briefly after opening. However, continuous selling pressure sent the key index lower and fluctuated in a tight range throughout the day. It hit the intra-day low of 1,722.91 just before the closing bell before rebounding slightly to close off low. Chart-wise, the FBM KLCI formed a black candlestick in bearish Harami position, a top reversal candlestick pattern, which indicates a drastic changed in sentiment from bullish to bearish, and hence, the FBM KLCI is likely to further correct downward or consolidate today. Immediate downside support zone is at 1,722 to 1,714, while the overhead resistance zone is at 1,730 to 1,744.
MACD and its histogram were marginally higher, indicating a reduction in the upward momentum. RSI (14) hooked downward to 50.6 from 59.6, indicating a strong pulled back of the key index to the neutral zone from the bullish zone. Stochastic was higher at 75.6 from 61.9, indicating the short term up cycle is still intact. Readings from the indicators showed that the FBM KLCI staged a strong pullback but the short term cycle is still up, and hence, may consolidate.
With the strong pullback of the FBM KLCI yesterday, the key index has fallen back to the short term sideways trading range, and it proves that the breakout on Monday was a false breakout due to a last minute buying action on selected blue-chips, and the market has come back to its senses. Hence, the FBM KLCI is likely to continue to drift sideways range-bound for the short term until a convincing breakout is seen at either side of the trading range of 1,685 to 1,738.
Overnight, the Dow fell 47.51 points or -0.27% to close at 17,550.69. Today, the FBMKLCI is likely to trade within a range of 1,712 to 1,738.
This week's expected range: 1677 – 1750
Today’s expected range: 1712 – 1738
Resistance: 1728, 1733, 1738
Support: 1712, 1717, 1720
Stocks to watch: APFT, GENTING, HUNZPTY, MISC, MYEG, OCNCASH, OPENSYS, PWROOT, RAYA, XIANLNG
Stock pick highlight: XIANLNG (7121)
Last Price: RM0.67 +0.04
Support Level: RM0.635, RM0.59
Resistance Level: RM0.70, RM0.73, RM0.75, RM0.79, RM0.81, RM0.83, RM0.87, RM0.91, RM0.95, RM0.99, RM1.03
Entry Level: RM0.665 – RM0.675
XIANLNG (7121) rebounded from its intra-day low of 0.635 to close higher at the intra-day high of 0.67. Technically, the chart of XIANLNG formed a bullish white Marubozu candlestick with increasing volume indicating strong buying interest came into the stock yesterday. It breaks out from the consolidation forming an Ascending triangle pattern breakout. MACD swung upward but is still below the signal-line, and its histogram contracted upward strongly, indicating a changed in momentum to the upside and a buy signal. RSI (14) rose to 72.4 from 62.8, indicating the stock is turning very bullish. Stochastic rose to 80 from 53.3 and is above the slow stochastic line, indicating strengthening of the price and continuation of the up cycle. The medium and long term trend of XIANLNG is up, and the short term trend is also up with the 5-day SMA crossing above the 10-day SMA and both are above the 30-day SMA, and a confirmed breakout above RM0.70 will see an upside target of RM0.73, follow by RM0.75, RM0.79, RM0.81, RM0.83, RM0.87, RM0.91, RM0.95, RM0.99, and RM1.03.
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 (RM0.70). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM0.73, RM0.75, RM0.79, RM0.81, RM0.83), stop loss (RM0.63)
Mid Term – target price at (RM0.87, RM0.91, RM0.95, RM0.99, RM1.03), stop loss (RM0.59)
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