FBM KLCI - sign of rebound

FBM KLCI - sign of rebound

Stocks on Bursa Malaysia ended marginally higher yesterday with the benchmark FBM KLCI closing 0.52 point better at 1,840.13 after fluctuating between 1,836.37 and 1,846.06 throughout the day. Market breadth was positive with gainers outpacing losers by 518 to 307 while 353 counters were unchanged. Total volume expanded to 2.7 billion shares worth RM2.51 billion from 2.02 billion shares worth RM2.08 billion on Tuesday.

Continuing the downtrend from Tuesday, the FBM KLCI opened 2.15 points lower at 1,837.46 and slipped lower to hit the intra-day low of 1,836.37 briefly after opening. The key index rebounded from the low and rallied higher to hit the intra-day high of 1,846.06 in the next thirty minutes. However, the rebound was met with strong resistance from profit-takers and the key index slipped lower for the rest of the day to end marginally higher. Chart-wise, the FBM KLCI formed a bullish white inverted hammer candlestick pattern, a bottom reversal pattern, which indicates buyers have appeared at current level. However, the FBM KLCI will have to close above 1,846-point to confirm the reversal, and hence, the key index is likely to stay in range-bound consolidation today with an upward bias. Immediate overhead resistance zone is at 1,846 to 1,856, while the immediate downside support zone is at 1,836 to 1,831.

MACD continued to slide lower and so is the histogram, indicating further loss in momentum and a state of consolidation. RSI (14) hooked upward slightly to 59.6 from 59.3, indicating a mild technical rebound of the FBM KLCI, and the short term relative strength is still mildly bullish. Stochastic was lower at 63.5 from 70.1, indicating continuation of the down cycle and further consolidation. Readings from the indicators showed that the FBM KLCI is in a state of consolidation.

The near term trend of the FBM KLCI is down as the key index has closed below the 5 and 10-day simple moving average (SMA). Nevertheless, the short, medium and long term trend is still up. The price action of the FBM KLCI yesterday showed that the key index has found support at the 1,837-point support level and rebounded from it. For today, the FBM KLCI is likely to stay sideways range-bound but with an upward bias, and a break above 1,846-point will see the key index move higher towards the 1,850 zone. On the broader market, rotational play on small caps and ACE market counters continued to be active as the shown by the increased in total volume, and Oil and Gas related counters showed signs of demand led by SapuraKencana.

Overnight, the Dow rose 75.91 points or 0.42% to close at 18,112.61. Today, the FBMKLCI is likely to trade within a range of 1,825 to 1,855.

This week's expected range: 1816 – 1875
Today’s expected range: 1825 – 1855

Resistance: 1845, 1850, 1855
Support: 1825, 1831, 1835

Stocks to watch: ABLEGRP, ARMADA, AT, BARAKAH, BDB, CENSOF, DELEUM, DNEX, DUFU, EWEIN, FITTERS, FRONTKN, GADANG, HOVID, IRETEX, JCY, KNM, LBALUM, MHB, MUHIBAH, MULPHAL, PARAMON, PELIKAN, PERISAI, SKPETRO, TAS, THHEAVY, TNLOGIS, UMWOG, YGL

Stock pick highlight: EWEIN (7249)

Last Price: RM0.65 +0.05
Support Level: RM0.595, RM0.575
Resistance Level: RM0.66, RM0.675, RM0.70, RM0.725, RM0.75, RM0.78, RM0.80, RM0.85, RM0.90
Entry Level: RM0.65 – RM0.66

Technical Analysis

EWEIN (7249) rebounded from its intra-day low of 0.60 to close higher at 0.65 after hitting the intra-day high of 0.66. Technically, the chart of EWEIN formed a bullish white candlestick with increasing volume, indicating strong buying interest came into the stock yesterday. It breaks out from the consolidation range forming a Rectangle pattern breakout. MACD surged upward and is above the signal-line, and its histogram also extended upward, indicating an increased in momentum to the upside and a buy signal. RSI (14) rose to 73.1 from 65.1, indicating the stock is turning very bullish. Stochastic rose to 91.3 from 88.1, indicating the stock is turning stronger after recent consolidation. The long term trend of EWEIN is sideways while the medium term trend has just turned up, and the short term trend is up with the 5-day SMA closing above the 10-day SMA and is also above the 30-day SMA, and a confirmed breakout above RM0.66 will see an upside target of RM0.675, follow by RM0.70, RM0.725, RM0.75, RM0.78, RM0.80, RM0.85 and RM0.90.

Since the short term trend is bullish, day traders with shorter time frame perspective may ride on the short term bullishness and buy on breakout level (RM0.66). Those with lower risk appetite should wait at the side-line and buy on the dip.

Price Objective
Short Term – target price at (RM0.685, RM0.705, RM0.74, RM0.77), stop loss (RM0.64)
Mid Term – target price at (RM0.80, RM0.835, RM0.855, RM0.88), stop loss (RM0.625)

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.

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