Stocks on Bursa Malaysia closed mixed last Friday following a severe bout of persistent selling pressure in the final hours and cloaked by weak market sentiment. The market gave up early gains on profit-taking seen in the consumer, plantation and properties segment. The benchmark FBM KLCI fell 0.92 point or 0.05% to close at 1,781.26, ahead of the long weekend which saw Bursa Malaysia closed on Monday and Tuesday for the Federal Territory Day and Thaipusam holiday, after opening 6.18 points higher at 1,788.36 and hovered between 1,781.26 and 1,789.39 throughout the day. Week-on week, the FBM KLCI declined 21.82 points or 1.21% from 1803.08 on previous Friday. Nonetheless, market breadth was positive with gainers outpacing decliners by 440 to 344, while 330 counters were unchanged. Total turnover increased to 1.91 billion shares valued at RM2.2 billion from 1.89 billion shares worth RM2.2 billion on Thursday. Weekly turnover decreased to 9.74 billion units valued at RM11.07 billion from 11.32 billion units worth RM12.38 billion on previous week.
The benchmark FBM KLCI was in a consolidation mode last week where it opened last Monday 2.59 points lower at 1,800.49 and closed 6.64 points lower at 1,796.44, moving in line with regional peers which tracked the weak cue from Wall Street the previous Friday, and sentiment was also dampened by the victory of the anti-austerity Syriza party in the recent Greek elections. The local bourse rebounded on Tuesday in line with overnight gains on Wall Street which saw the FBM KLCI rebounded 6.73 points to close at 1,803.17, after hitting an intra-week high of 1,810.21. Wednesday saw the FBM KLCI dropping 7.29 points to 1,795.88 as market sentiment was dampened by the re-emergence of a geopolitical risk in Ukraine and uncertainty caused by renegotiations between the new anti-austerity Greek government and international lenders. The FBM KLCI tumbled 13.7 points to 1,782.18 on Thursday, after hitting an intra-week low of 1,779.17, on persistent selling pressures amid weak regional markets as investors were spooked by the Federal Reserve’s statement of a possible June 2015 interest rate increase. Weakness continued into Friday which saw the FBM KLCI closing 0.92 point lower to end the week at 1,781.26.
On the weekly chart, the FBM KLCI formed a dark-cloud-cover candlestick pattern which indicates profit-taking activity and consolidation after the rally on previous week. Hence, the FBM KLCI is likely to further consolidate in the coming holiday-shortened week with only three trading days. On the daily chart, the FBM KLCI formed a bearish black candlestick which indicates consolidation as the key index moved within the previous day’s range. Hence, the FBM KLCI is likely to further consolidate today within a range of 1,770 to 1,810.
Weekly MACD, albeit still below the zero-line, continued to rise and made a golden-cross over the weekly signal-line, issuing a bullish buy signal on the weekly chart. Daily MACD, however, fell further for a second consecutive session, while its histogram contracted for the third consecutive bar, indicating a state of consolidation on the daily chart. Weekly RSI (14) hooked downward to 47 from 50.6, indicating a pullback correction to the mildly bearish state from a neutral state. Daily RSI (14) was marginally lower at 56 from 56.3, indicating a state of consolidation. Weekly Stochastic was higher at 55.9 from 47.2, indicating an improvement of the weekly index strength and continuation of the weekly up cycle. Daily Stochastic, however, fell to 73.3 from 82.3, indicating further correction of the key index and continuation of the short term down cycle on the daily perspective. In short, readings from the weekly indicators showed that the FBM KLCI is gradually gaining strength on the weekly perspective, while the daily indicators showed that the FBM KLCI was going into a consolidation mode.
The technical picture of the FBM KLCI still remained very much unchanged in that the short term trend is up and the medium term trend is sideways, while the long term trend is still down. Nevertheless, the correction on last Thursday and Friday has seen the FBM KLCI going into a correction and consolidation mode for the immediate short term or near term. Hence, for the coming holiday-shortened week, the FBM KLCI is likely to move sideways range-bound within a range of 1,770 to 1,810. A break of the lower support at 1,770 is likely to see the FBM KLCI plunging lower to test the critical lower psychological support of 1,750, while a break of the upper resistance at 1,800 follow by 1,810 will see the FBM KLCI rally higher to the 1,821 to 1,830 zone. On the broader market, rotational play on small caps and ACE market is likely to continue as volume continues to stay near the two billion shares level.
Overnight, the Dow rose 305.36 points or 1.76% to close at 17,666.40. This week, the FBMKLCI is likely to trade within a range of 1,739 to 1,841, and today, the FBMKLCI is likely to trade within a range of 1,770 to 1,797.
This week's expected range: 1739 – 1841
Today’s expected range: 1770 – 1797
Resistance: 1786, 1792, 1797
Support: 1770, 1775, 1778
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