Stocks on Bursa Malaysia staged an oversold rebound yesterday, led by finance stocks despite the weak performance of regional bourses. Asian equities were mostly lower, weighed down by the slump in Chinese equities, weakening emerging market currencies, lower oil prices and the deadly Bangkok bombing. The FBM KLCI was 7.06 points or 0.45% better at 1,579.60, after moving between 1,562.88 and 1,584.05 throughout the day. Gainers led losers by 409 to 407 with 360 counters unchanged. Total volume rose to 2.25 billion units valued at RM2.11 billion from 2.06 billion units valued at RM1.95 billion on Monday.
Taking cue from the gains on Wall Street overnight, the FBM KLCI opened 0.55 of a point higher at 1,573.09 and move slightly higher, but selling pressure which emerged dragged the key index lower to hit the intra-day low of 1,562.88, losing 9.66 points at its worst. However, the FBM KLCI managed to stage a rebound rally which pushed the index to the intra-day high of 1,584.05 just before closing, but some last minute profit taking activity pulled the index to close off high. Chart-wise, the FBM KLCI formed a bullish white hammer candlestick, a bottom reversal candlestick pattern, which indicates buyers were in control after an initial weakness, and hence, the FBM KLCI is likely to stage further rebound or consolidate at current level today. Immediate overhead resistance zone is at 1,584 to 1,594, while the downside support zone is at 1,562 to 1,550.
MACD continued to slide lower but its histogram contracted upward for the first time after seven consecutive sessions of downward extension, indicating a reduction in the bearish momentum. RSI (14) hooked upward to 24.9 from 22.2, indicating a weak rebound. Stochastic was slightly lower at 5.2 from 5.9, indicating the key index is still in a state of consolidation. Readings from the indicators showed that the FBM KLCI has staged a mild oversold technical rebound.
The trend of the FBM KLCI still remained down and bearish as the key index continued to stay below the short, medium and long term moving averages. However, the rebound yesterday has gave a ray of hope that the FBM KLCI has found some support at current level and the down move has temporary truncated after hitting the 1,562-point low. Based on Elliott wave and Fibonacci study, the current wave-5 of the bigger wave-3 for the wave count starting from 1,867.53 has a 100% Fibonacci projection (FP) target of 1,561.69, and hence the FBM KLCI has completed a 100% move and is ripe for a technical rebound, which took place yesterday. Nevertheless, if the rebound failed to reverse the current downtrend and a continuation will see a downside target of 1,448 for a 161.8% Fibonacci projection.
Overnight, the Dow fell 33.84 points or -0.19% to close at 17,511.34. Today, the FBMKLCI is likely to trade within a range of 1,545 to 1,605.
This week's expected range: 1485 – 1701
Today’s expected range: 1545 – 1605
Resistance: 1588, 1596, 1605
Support: 1545, 1554, 1566
Stocks to watch: BPPLAS, CAP, CHINA50-H2, DESTINI, FBMKLCI-CR, GTRONIC, HARTA, HSI-HB, KULIM, MPI, PWROOT, QL, SUPERMX, TOPGLOV, WELLCAL, XDL
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