Stocks on Bursa Malaysia closed lower last Friday as investors booked profit ahead of the weekend, with losses mostly seen in selected heavyweights. The FBM KLCI fell 1.43 points or 0.08% to close at 1,743.57 after hovering between 1,732.35 and 1,745.58 throughout the day. On a weekly basis, the FBM KLCI rose 11.13 points from 1,732.44 on previous Friday. Losers led gainers by 426 to 366 with 296 counters unchanged. Total volume declined to 1.8 billion shares worth RM1.9 billion from 1.9 billion shares worth RM2.3 billion on Thursday. Weekly turnover increased to 8.78 billion units worth RM10.24 billion from 8.03 billion units worth RM8.95 billion the previous week.
Following the bearish performance on Wall Street the previous Friday, the benchmark FBM KLCI opened last Monday 2.34 points lower at 1,730.10 and plunged to the intra-week low of 1,718.16 thirty minutes after opening, but rebounded to close at the intra-day high of 1,735.08, up 2.64 points. Tuesday saw the FBM KLCI opened 8.54 points lower at 1,726.54 and slipped lower to the intra-day low of 1,725.98 briefly after opening, but rebounded strongly to close 13.82 points higher at 1,748.9 on news that CIMB and RHB Capital are looking to scrap their proposed mega bank merger with Malaysian Building Society Bhd (MBSB) has triggered massive buying interest in the banking stocks. The FBM KLCI fell 6.89 points to 1,742.01 on Wednesday on profit-taking in banking stocks following the weak performance on Wall Street overnight. Thursday saw the FBM KLCI rebounded to close 2.99 points at 1,745 supported by gains in selected finance counters and the recovery of the ringgit. However, Friday saw profit-taking activity ahead of the weekend which dragged the key index to close 1.43 points lower at 1,743.57.
On the weekly chart, the FBM KLCI formed a bullish white piercing-line candlestick which indicates technical rebound of the key index after falling for two consecutive weeks. Nevertheless, the candlestick was bounded within the previous week’s black candlestick, and hence, the FBM KLCI is likely to move sideways range-bound in the coming week within a range of 1,706 to 1,770. On the daily chart, the FBM KLCI formed a bullish white hammer candlestick indicating a strong rebound after hitting an intra-day low of 1,732.35, losing 12.65 points at its worst on Friday. Hence, the FBM KLCI is likely to stage a follow through rebound to move higher today.
Weekly MACD was almost flat, while its histogram further contracted upward, indicating a reduction in the bearish momentum and a state of consolidation with an upward bias. Daily MACD was higher but is still below the zero-line, and its histogram was marginally higher or almost flat, indicating a state of consolidation. Weekly RSI (14) hooked upward to 38.8 from 36.1, indicating a mild rebound and the weekly relative strength of the FBM KLCI is still bearish. Daily RSI (14) hooked downward slightly to 48.9 from 49.4, indicating a mild pullback correction and the daily relative strength of the key index is mildly bearish. Weekly Stochastic hooked downward to 38.2 from 41.9, indicating a pullback correction and a state of consolidation on the weekly perspective. Daily Stochastic hooked downward to 58 from 60.8 but is still staying above the slow stochastic line, indicating a mild pullback correction of the FBM KLCI. In short, readings from both the weekly and daily momentum indicators showed that the FBM KLCI is in a state of consolidation.
The technical picture of the FBM KLCI has not change much with the medium to long term trend is still remained down and bearish. However, the short term trend of the FBMKLCI has turned sideways range-bound as the key index continues to stay within a range of 1,706 to 1,770. With the retreat on Friday, the FBM KLCI has again closed below the 5 and 15-day simple moving average (SMA), but is still staying above the 10, 20 and 30-day SMA, indicating a state of range-bound consolidation for the short term. For the coming week, the FBM KLCI is likely to stay sideways range-bound within a range of 1,706 to 1,770, and a break in either the support of 1,706 or resistance of 1,770 will see the FBM KLCI moving in the direction of the breakout. A break of the downside support of 1,706 will see the key index plunging lower to test the next lower support zone of 1,700 to 1,671 which will see the market sentiment turning bearish. On the broader market, rotational play of the small caps and ACE market counters is likely to continue.
Last Friday, the Dow rebounded 190.86 points or 1.10% to close at 17,511.57. This week, the FBMKLCI is likely to trade within a range of 1,692 to 1,783, and today, the FBMKLCI is likely to trade within a range of 1,721 to 1,760.
This week's expected range: 1692 – 1783
Today’s expected range: 1721 – 1760
Resistance: 1749, 1754, 1760
Support: 1721, 1726, 1735
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