INDEXFTSE:FBMKLCI : FBM KLCI - likely to further consolidate
Stocks
on Bursa Malaysia ended broadly lower for the second consecutive day on
last Friday, dragged down by oil and gas-related heavyweights. The weak
performance of the local bourse was influenced by the Organization of
Petroleum Exporting Countries (OPEC) meeting on Thursday, which decided
not to cut production, and hence, causing further plunge in Brent crude
to hover near a four-year low. The FBMKLCI lost 9.02 points or 0.49% to
close at 1,820.89 after moving between 1,815.31 and 1,827.16 throughout
the day. Week-on-week, the key index gained 11.76 points from 1,809.13
on previous Friday. Losers outpaced gainers by 609 to 241 with 292
counters unchanged. Total volume increased to 1.87 billion units worth
RM1.99 billion from 1.55 billion units worth RM1.36 billion on Thursday.
Weekly turnover increased to 9.49 billion shares worth RM9.20 billion
from previous week’s 8.68 billion shares worth RM8.30 billion.
The
FBMKLCI went through a volatile week last week which saw the key index
opened last Monday 2.32 points higher at 1,811.45, taking cue from the
record close of the Dow on previous last Friday, buy pulled back on
profit-taking to hit the intra-week low of 1,809.63 briefly after
opening. Nonetheless, a strong rebound on bargain hunting pushed the
FBMKLCI to close 24.64 points higher at 1,833.77, in line with regional
bourses as China’s decision to cut the lending rate had boosted the
country’s economy and strengthened optimism in the global economy.
Tuesday saw the FBMKLCI gained another 4.79 points to close at 1,838.56
after the government announced to abolish the fuel subsidies beginning
Dec 1st, 2014. The FBMKLCI added another 3.61 points on Wednesday to
close at 1,842.17 after the market received a boost from the upward
revision to the United States' economic growth rate in the
July-September period to 3.9% from 3.5%. Nonetheless, the FBMKLCI shed
12.26 points on Thursday to close at 1,829.91 after three straight days
of gains and taking the cue from weak regional markets amid the fall in
oil prices, and the key index continued to plunge of Friday to lose
another 9.02 points to close the week at 1,820.89. On the weekly chart, the FBMKLCI formed a white inverted hammer candlestick, a key bottom reversal candlestick pattern which indicates the fight back of the bulls after being beaten down for three consecutive weeks. However, selling at latter part of the week showed that the bears were still around. Hence, the FBMKLCI is likely to stay in range-bound consolidation in the coming week. On the daily chart, the FBMKLCI formed a white spinning-top candlestick with a huge downside gap which indicated strong initial fear and selling pressure which pushed the key index to an intra-day low of 1,815.31, losing 14.6 points at its worst. However, the key index was being lifted from the low to close near the opening level, thanks to the month-end window dressing activity by the funds. The white spinning-top candlestick formation also indicated indecision of market direction with a slight upward bias, and hence, the FBMKLCI is likely to consolidate with a possibility to rebound after correcting the overbought situation. Immediate overhead resistance zone is at 1,827 to 1,830, while the downside support zone is at 1,815 to 1,805.
Weekly MACD hooked upward gently and its histogram also contracted upward indicating a mild improvement of the index’s momentum. However, as MACD is still below the signal-line and the zero-line, the weekly outlook is still bearish. Daily MACD turned downward, and its histogram also contracted southward indicating profit-taking correction. Weekly RSI (14) hooked upward to 45.3 from 41.9, indicating a slight improvement in the weekly relative strength but the key index is still in the mildly bearish state. Daily RSI (14) fell to 47.37 from 51.5, indicating the daily relative strength of the key index has turned mildly bearish from a neutral state. Weekly Stochastic was marginally lower at 42.7 from 43.7, indicating a state of consolidation. Daily Stochastic slipped lower to 63.8 from 79.3, and has made a dead-cross over the slow stochastic line, issuing a stochastic sell signal, indicating an end to the recent rebound and the possible beginning of a short term down cycle. In short, both the weekly and daily indicators showed that the FBMKLCI is in a state of consolidation with a bearish bias, and hence, is likely to further consolidate.
The general trend of the FBMKLCI is still down. However, the short to medium term trend of the FBMKLCI has turned sideways range-bound within a range of 1,766 to 1,858. The fresh sell signal issued by the daily Stochastic for the FBMKLCI following last week’s failed rebound indicates further correction potential this week. Point to note of bearish technical significance would be the dead-cross of the 100-day simple moving average (SMA) below the 200-day SMA, presently at 1,848 and 1,851, respectively, which could indicates an extended correction phase. For the coming week, the FBMKLCI is likely to move within a range of 1,800 to 1,840 as the market awaits fresh catalysts. Immediate downside supports would be the recent lows of 1,809 and 1,805 followed by the 1,800-point psychological support level. A stronger support is expected at 1,778, the 50% Fibonacci retracement support level of the range measured from the August 28th 2013 low of 1,660 to the 1,896 record high.
Last Friday, the Dow closed almost unchanged at 17,828.24 with a marginal gain 0.49 points or +0.00%. This week, the FBMKLCI is likely to trade within a range of 1,768 to 1,881, and today, the FBMKLCI is likely to trade within a range of 1,803 to 1,839.
This week's expected range: 1768 – 1881
Today’s expected range: 1803 – 1839
Resistance: 1826, 1832, 1839
Support: 1803, 1809, 1815
Stock to watch: AIRASIA, CAB, KIANJOO, MUIIND, PRESBHD, PICORP, SCABLE
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/
