FBM KLCI - likely to further consolidate
Stocks
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.
The
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
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