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FBM KLCI - likely to further consolidate

KLCI 20141205wkStocks on Bursa Malaysia ended on a higher note last Friday lifted by buying in blue-chips and selected heavyweights. The benchmark FBMKLCI rose 3.68 points or 0.21% to close at 1,749.37, after opening 3.28 points lower at 1,743.4 and moved between 1,740.56 and 1,755.94 throughout the day. Week-on-week, the FBMKLCI fell 71.52 points or 3.93% from 1,820.89 on previous Friday. Market breadth was positive with gainers trounced losers by 459 to 330, while 308 counters were unchanged. Total volume slipped to 1.4 billion units worth RM1.8 billion from 1.9 billion units worth RM2.3 billion on Thursday. Weekly turnover increased to 9.76 billion shares worth RM11.16 billion from 9.49 billion shares worth RM9.20 billion registered on previous week.

KLCI 20141205The FBMKLCI was in a bearish downtrend last week where it opened last Monday 0.63 of a point higher at the intra-week high of 1,821.52 and plunged lower on heavy selling pressure for the rest of the day. The key index hit an intra-day low of 1,768.21, losing 52.68 points at its worst, before rebounding slightly to close off low at 1,778.27, losing 42.62 points or 2.34%, dragged down by the weaker oil prices coupled with discouraging manufacturing data from China, and fund selling of Petronas related stocks and banks. Tuesday saw an oversold rebound with the FBMKLCI rebounding 7.7 points to close at 1,785.97, after crude prices rebound towards US$70 a barrel. Wednesday and Thursday saw renewed selling pressure with the key index falling 27.82 points and 12.46 points to close at 1,758.15 and 1,745.69 respectively. The market took a breather on Friday as foreign selling slowed down and the key index rebounded 3.68 points to close at 1,749.37 after hitting an intra-week low of 1,740.56.

On the weekly chart, the FBMKLCI formed a bearish long black candlestick which closed below the pivot low support of 1,766.22, indicating heavy selling pressure, and hence, is likely to slide lower in the coming week on continued selling pressure. On the daily chart, the FBMLCI formed a bullish piercing-line candlestick pattern, a bottom reversal pattern which indicates mild technical rebound. However, the rebound was not strong as the key index could not close above the mid-range of Thursday’s candlestick. Hence, the FBMKLCI is likely to further consolidate today with a mild upward bias. Immediate overhead resistance zone is at 1,755 to 1,768, while the downside support zone is at 1,740 to 1,727.

Weekly MACD hooked downward sharply, indicating a sharp increase in the bearish momentum. Daily MACD and its histogram also plunged lower, indicating a very bearish situation. Weekly RSI (14) hooked downward sharply to 32.7 from 45.3, indicating the weekly relative strength of the key index has turned bearish from a mildly bearish state. Daily RSI (14) hooked upward gently to 30.2 after hitting an oversold value of 28.5 on Thursday, indicating a mild technical rebound. Weekly Stochastic fell sharply lower to 29.4 from 42.7, indicating a sharp increase in the bearish strength and continuation of the weekly down cycle. Daily Stochastic slid lower to 3.7 from 9, indicating deeply oversold situation and continuation of the daily down cycle. Readings from both the weekly and daily indicators showed that the FBMKLCI is very bearish, and hence, the key index is likely to further correct downward. Nonetheless, the key index was oversold for the short term, and hence, a technical rebound might be expected.

The technical picture of the FBMKLCI remained very much unchanged in that it is down and bearish as the key index continues to stay below the short, medium and long term moving averages. The key index has closed below the very long term 600-day simple moving average on last Friday, signifying the bear market may prolong for a while. Moreover, on the weekly the chart, the FBMKLCI has closed below the long term supporting uptrend line of the uptrend channel, signifying the bull market of the FBMKLCI was over and the beginning of a bear market. Hence, be prepared for more rough ride ahead. With last Friday’s technical rebound, the FBMKLCI was still closing slightly below the 61.8% Fibonacci retracement support turned resistance level of 1,750, indicating strong overhead resistance. Looking forward, the FBMKLCI is likely to further consolidate in the coming week, and a break of the immediate support at 1,740 will likely see the key index plunging lower to the next lower support zone of 1,702 to 1,727 which coincides with the 76.4% Fibonacci retracement support at 1,716 for the range measured from the August 28th 2013 low of 1,660.39 to the 1,896.23 record high, and further below the 1,700-point psychological support would see a lower target of 1,660, the pivot low support formed on August 28th 2013.

Last Friday, the Dow rose 58.69 or 0.33% to close at a fresh record high of 17,958.79. This week, the FBMKLCI is likely to trade within a range of 1,689 to 1,851, and today, the FBMKLCI is likely to trade within a range of 1,725 to 1,771.

This week's expected range: 1689 – 1851
Today’s expected range: 1725 – 1771

Resistance: 1756, 1764, 1771
Support: 1725, 1733, 1741
Stocks to watch: DAYANG, DESTINI, IFCAMSC, MQTECH, PASUKGB, SCIB, SOLUTN, TMCLIFE, UNISEM, ZECON

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.

http://millionairetrendtrader.blogspot.com/
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