FBM KLCI - bearish momentum reducing
Stocks on Bursa Malaysia ended lower
yesterday with the benchmark FBMKLCI closing 2.74 points or 0.16% lower
at 1,738.10, on lack of buying interest in blue-chips, coupled with the
declining global oil prices, weaker corporate earnings, slower economic
growth, and the strengthening US dollar against the ringgit and major
Asian currencies. The benchmark index moved within a range of 1,730.77
to 1,741.31. Losers trounced gainers by 647 to 216, while 239 counters
were unchanged. Total volume increased to 1.4 billion units worth RM1.7
billion from 1.3 billion units worth RM1.5 billion on Monday.
The FBMKLCI opened 0.33 of a point higher at 1,741.17 and surged to the intra-day high of 1,741.31 briefly after opening. However, heavy profit-taking activity dragged the key index to hit the intra-day low of 1,730.77 thirty minutes later, losing 10.07 points at its worst. The FBMKLCI rebounded from the low and moved higher gradually for the rest of the day to close off low. Chart-wise, the FBMKLCI formed a black hammer candlestick; a bottom reversal candlestick pattern which indicates the key index was being beaten down by the bears initially but recovered much of its losses later on buying support. Hence, the FBMKLCI is likely to stay in consolidation today with immediate overhead resistance zone at 1,740 to 1,750, while the downside support zone is at 1,730 to 1,725.
MACD continued to slide lower, but its histogram contracted upward for the first time after sliding southward for eight consecutive bars, indicating a reduction in the bearish momentum. RSI (14) was lower at 27.9 from 28.5, indicating a mild loss and the key index is very bearish and oversold. Stochastic rose further to 6.4 from 4.9, indicating mild rebound from the low and a technical rebound is expected ahead. Readings from the indicators showed that the FBMKLCI is still weak and bearish, but is oversold and a rebound is imminent.
The trend of the FBMKLCI remained down and bearish as the key index continued to stay below the short, medium and long term moving averages, as well as below the downtrend channel. However, signals from the candlestick and momentum indicators showed that the downward momentum of the key index showed signs of reducing, and hence, the FBMKLCI is likely to consolidate at current level with the possibility of a rebound. Nonetheless, a further break of the immediate support at 1,730 will see the FBMKLCI sliding lower toward the next lower support zone of 1,725 to 1,720.
Overnight, the Dow fell 51.28 or -0.29% to close at 17,801.20. Today, the FBMKLCI is likely to trade within a range of 1,720 to 1,752.
This week's expected range: 1689 – 1851
Today’s expected range: 1720 – 1752
Resistance: 1742, 1747, 1752
Support: 1720, 1725, 1731
Stocks to watch: AIRASIA, AAX, FBMKLCI-HB, KAREX, TAKASO
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.
