Stocks on Bursa Malaysia ended Wednesday, the last trading day in 2014, on an easier note as market sentiment remained cautious over the outlook of the global economy. The local bourse also tracked the weaker performance of regional stock markets as worries over Greece’s future in the Eurozone and a slump in crude oil prices to a fresh five-and-a-half-year low plagued the market. At close, the benchmark FBMKLCI declined 5.58 points or 0.32% to 1,761.25 after hovering between 1,755.93 and 1,768.85 throughout the day. Losers led gainers by 394 to 391, while 285 counters were unchanged. Total volume declined to 1.4 billion units worth RM1.6 billion from 1.6 billion units worth RM1.6 billion on Tuesday. Bursa Malaysia was closed yesterday for the New Year holiday.
Taking cue from the weak performance on Wall Street overnight, the FBMKLCI opened 7.07 points lower at 1,759.76 but rebounded and climbed gradually to touch the intra-day high of 1,768.85 at noon. However, the rebound could not sustain and the key index fell on heavy profit-taking in the afternoon session to hit the intra-day low of 1,755.93 before rebounding slightly to close off low. Chart-wise, the FBMKLCI formed a white inverted hammer candlestick which indicates consolidation as the trading range on Wednesday was within the range on Tuesday. Hence, the FBMKLCI is likely to stay in consolidation today with a downward bias. Immediate downside support is at 1,753, follow by 1,747 and 1,732, while the overhead resistance zone is at 1,770 to 1,789.
MACD continued to rise but its histogram contracted slightly, indicating a reduction in the upward momentum. RSI (14) slipped lower to 50.8 from 52.6, indicating a mild pullback of the key index to the neutral state from a mildly bullish state. Stochastic hooked downward to 95 from 97.8, indicating a pullback correction after the key index ran up continuously over the last ten sessions and was overbought. Readings from the indicators showed that the FBMKLCI was staging a correction and is likely to further consolidate today.
The short term trend of the FBMKLCI is up as the key index continues to stay above most of the short term simple moving averages (SMA). However, the key index has closed slightly below the 5-day SMA on Wednesday, signifying the key index is likely to correct or consolidate in the immediate near term. From the bigger picture, the medium to long term trend of the FBMKLCI is still down as the key index continued to stay below the medium to long term moving averages, and the short term uptrend over the last two weeks may turn out to be just a technical rebound on year-end window dressing in an oversold market. In order to reverse the current downtrend, the FBMKLCI must at least closed above the 50% Fibonacci retracement level of 1,784 for the range measuring from the historical high of 1,896.23 to the recent low of 1,671.82, and to close above the overhead resistance zone posted by a cluster of the medium to long term moving averages with the highest resistance at 1,842-point posted by the 200-day SMA.
On Wednesday, the Dow fell 160.00 points or -0.89% to close Year 2014 at 17,823.07. Today, the FBMKLCI is likely to trade within a range of 1,742 to 1,781.
This week's expected range: 1693 – 1808
Today’s expected range: 1742 – 1781
Resistance: 1768, 1774, 1781
Support: 1742, 1749, 1755
Stocks to watch: BJCORP, EASTLND, EVERGRN, SENDAI, GPACKET, IJMPLNT, MINETEC, MLGLOBAL, PMCORP, PARAMON, SUNZEN, THPLANT
Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. The Stocks to watch is not a recommendation to buy or sell the particular stock, as it is only meant for graduates of the "Share Trading the Pro Way" course as case study. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.