Stocks on Bursa Malaysia extended gains for the second day on Friday with the benchmark FBMKLCI up 4.38 points, or 0.25%, to 1,732.44, as investors and bargain hunters started nibbling at value buy selectively and the local bourse rose in tandem with most regional peers, on hopes of a solid US job report data due later in the night. On a weekly basis, the key index lost 20.33 points from previous Friday’s 1,752.77. Gainers outpaced losers by 424 to 342 with 319 counters unchanged. Total volume surged to 1.7 billion shares worth RM1.8 billion from 1.6 billion shares worth RM1.8 billion on Thursday. Weekly turnover for the regular week increased to 8.03 billion units worth RM8.95 billion from 5.31 billion units worth RM5.48 billion recorded the previous holiday-shortened week.
The FBMKLCI was in a correction mode last week where it opened last Monday 5.66 points higher at 1,758.43 and surged higher to hit the intra-week high of 1,759.15 briefly after opening. However, heavy selling pressure dragged the key index lower to close 16.15 points lower at 1,736.62. Tuesday saw the FBMKLCI fell 20.04 points, dragged down by losses in selected blue chips, to close at 1,716.58, in tandem with most regional peers amid the slump in global crude oil prices and the slump on Wall Street overnight which saw the Dow losing 331 points. The FBMKLCI eased another 7.40 points on Wednesday to close at 1,709.18 after hitting the intra-week low of 1,706.18. The benchmark FBMKLCI rebounded strongly on Thursday to close 18.88 points, or 1.1%, at 1,728.06 as Malaysia’s November 2014 export data released on Wednesday saw the country’s trade surplus at its highest in three years, and the rebound continued into Friday with another 4.38 points gain.
On the weekly chart, the FBMKLCI formed a bearish black candlestick which confirmed the reversal signal generated by the black spinning-top candlestick formed the previous week. Hence, the FBMKLCI is likely to further consolidate in the coming week. On the daily chart, the FBMKLCI formed a bearish black spinning-top candlestick on Friday, indicating uncertainty of market after a strong rebound on Thursday, and hence, the FBMKLCI is likely to correct or consolidate today. Immediate downside support zone is at 1,725 to 1,706, while the overhead resistance zone is at 1,738 to 1,750.
Weekly MACD continued to slide lower below the zero-line but its histogram contracted upward marginally, indicating a reduction in the bearish momentum on the weekly horizon. Daily MACD was higher but is below the zero-line, and its histogram extended upward for the first time after contracting for six consecutive sessions, indicating an initial change in the momentum from down to up on the daily perspective. Weekly RSI (14) slid lower to 36.1 from 39, indicating a further loss in the index’s weekly strength in the bearish zone. Daily RSI (14), however, was higher at 45 from 43.6, indicating a mild gain of the index’s daily strength in the mildly bearish zone. Weekly Stochastic was higher at 41.9 from 39, indicating continuation of the weekly up cycle after the rebound two weeks ago. Daily Stochastic, however, was marginally lower at 42.2 from 43.6, indicating continuation of the short term down cycle and consolidation. In short, readings from the weekly momentum indicators showed that the FBMKLCI is in a state of consolidation with sign from the MACD histogram that the downward momentum is reducing; and readings from the daily momentum indicators also showed a state of consolidation but with slight upward bias.
The general trend of the FBMKLCI still remained down and bearish as the key index continued to stay below the short, medium and long term moving averages, as well as within the downtrend channel drawn from the pivot high of 1,896.23 to the pivot low of 1,671. However, the upward move on last Friday has lifted the key index to close above the 5 and 20-day simple moving average (SMA), indicating an upswing which has reversed the near term trend from down to up. Nonetheless, the FBMKLCI is still closing below the 10, 15 and 30-day SMA, in order to reverse the short term downtrend, the key index must at least close above this cluster of short term moving average resistance zone with the upper resistance at 1,744-point level posted by the 10 and 30-day SMA. For the coming week, the FBMKLCI is likely to stay range-bound within a range of 1,671 to 1,770 with a downward bias. The critical support to watch out is the pivot low of 1,706 formed on last Wednesday, and a break of this pivot support will see the FBMKLCI sliding lower to test the psychological support of 1,700, and a failure will see the key index plunging lower towards the 1,671-point level.
Last Friday, the Dow fell 170.50 points or -0.95% to close at 17,737.37. This week, the FBMKLCI is likely to trade within a range of 1,679 to 1,785, and today, the FBMKLCI is likely to trade within a range of 1,713 to 1,751.
This week's expected range: 1679 – 1785
Today’s expected range: 1713 – 1751
Resistance: 1738, 1744, 1751
Support: 1713, 1719, 1725
Stocks to watch: ARMADA, CENSOF, DELEUM, DNEX, EVERGRN, FBMKLCI-HB, GAMUDA, INTEGRA, KPJ, KSL, MMODE, MPI, MPAY, PRLEXUS, SKPETRO, SCH, SCOMIES, TAMBUN, UMWOG, WTK
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