FBM KLCI - down cycle

Stocks on Bursa Malaysia slumped for another week last week, triggered by rising political tensions in the Korean peninsula and concern the Europe debt crisis and its possible contagion effect might undermine the global economic recovery. Sell down of SIME due to cost overrun issue, and other key heavyweights such as PPB and Banking stocks also contributed to the nine consecutive days of losses in the benchmark index FBM KLCI.

On a week-on-week basis, the FBM KLCI lost 16.57 points or 1.3% to settle at 1,269.16. For the holiday-shortened week, the average daily trading volume increased to a four-week high of 849.3 million shares with average value of RM1.61 billion, compared with the 751.5 million shares worth RM1.35 billion average the previous week, as foreign selling of blue chips picked up pace.

On the weekly chart, the FBM KLCI fell to the intra-week low of 1243.86 before bouncing back strongly last Thursday to close above the psychological support level of 1250 and the 200-day moving average (MA) which is now at 1267.55. It formed a hammer candlestick which indicates strong technical rebound due to bargain-hunting of blue-chip shares by investors.

The FBM KLCI is now below its 5, 10 and 30-week moving averages which indicates a possible medium term downtrend in the forming. On the daily chart, the key index has moved below all the important long term MA support but managed to climb back just above the 200-day MA. The important support levels to watch for this week is the immediate 200-day MA level at 1267, the psychological support level at 1250 and the low of the last up wave at 1224. If these levels could not hold, then we might see the key index plunging to the 1200 and 1150 levels. 1224 coincided with the 23.6% Fibonacci Retracement (FR) level whereas 1150 coincided with the 38.2% FR for the full length of the run-up from the low of 836 on March 12 2009 to the 1,349 peak of May 4.

Weekly MACD continued to slide down but still in the positive zone, while on the daily chart, daily MACD continued to slide deep into the negative zone indicating the downward momentum is still very strong. Weekly RSI(14) at 45.7 has cross below the 50 level into the bearish zone, while daily RSI(14) at 31.2 has hooked up reflecting the technical rebound on last Thursday. Weekly Stochastic at 52 continued to slide lower, indicating the down cycle is picking up in strength, while the daily Stochastic at 9.5 is deeply oversold but has hooked up reflecting the technical rebound.

While the adage "Sell in May and Go Away" may have become a self fulfilling prophecy, the main cause for the fall in global equity market and our local FBM KLCI is the Europe debt crisis and other regional issues. Technically, the short term down cycle for the FBM KLCI has begun, while the underlying long term trend is still up.

On a lack of fresh leads, with the mid-year school holiday coming and the FIFA world cup starting in two weeks time, the market is expected to go into a consolidation mode.

The Dow closed 122.36 points or 1.19% lower on last Friday at 10,136.63. This week, the FBM KLCI may trade within a range of 1208 to 1305, and for today it is likely to trade within a range of 1226 to 1286.

This week's expected range: 1208 – 1305
Today’s expected range: 1235 – 1286

Resistance: 1275, 1281, 1286
Support: 1235, 1244, 1256

FBM KLCI - down for ninth days

Stocks on Bursa Malaysia ended steadier yesterday in line with the rebound in regional markets. The FBM KLCI however, ended 1.19 point or 0.1% lower to close at 1248.94, marking its ninth straight days of losses. Losses in SIME, PPB, MISC, and GENM dragged down the key index. Gainers led losers by 426 to 320 while 265 counters were unchanged. Volume declined slightly to 929 million shares worth RM2.109 billion.

The FBM KLCI opened six points higher and hit the intra-day high of 1260.27, gaining as much as 10 points before profit-taking activities sent it to close in the red at 1248.94, just marginally below the psychological support level at 1250. Chart wise, it formed a black candlestick with the body overlapping the previous candle, and a marginally short lower shadow, indicating the fall is slowing down, and possibly a temporary bottom is in the forming.

Currently, the benchmark index is in a critical support level, if this level could not hold, then the index might come down to test the 1224 to 1230 support zone, in which 1228 happen to be the 23.6% Fibonacci retracement level for the full length of the run up from the bottom in March 2009 to the recent high at 1349. After this, the lower support levels would be at 1200 and 1150.

MACD continued to slide southward, indicating the increased in downward momentum. RSI(14) at 17 is into the very bearish zone, and is deeply oversold for the short term. Stochastic at 4.72 is also into the deeply oversold zone, and indicate very weak market strength. In view of the deeply oversold situation, a technical rebound is likely to happen anytime.

The FBM KLCI has entered the bear phase, technically, when it closed below the 200-day MA which is now at 1267. The short term trend of the benchmark index is currently down, but the underlying long term trend is still up. The market may remain weak for a while and need to consolidate before it can climb upward again.

Overnight, the DJIA fell 69.30 or 0.69% to close at 9974.45 after gaining as much as 135 points on intra-day. European market rebounded with DAX +87.98 (+1.55%) to close at 5758.02 and FTSE +97.40 (+1.97%) to close at 5038.08.

Today, the market is likely to remain cautious and the FBM KLCI is likely to trade within a range of 1231 to 1265.

This week's expected range: 1230 – 1322
Today’s expected range: 1231 – 1265

Resistance: 1255, 1260, 1265
Support: 1231, 1239, 1244

FBM KLCI - testing critical support

Stocks on Bursa Malaysia ended lower almost across the board yesterday in tandem with losses in regional markets, on fear of the possible contagion effect of Europe debt crisis, uncertainties of global economic recovery, and the tension building up between North and South Korea. The FBM KLCI fell for the eighth consecutive days and suffered its worst losing streak since 2008, closing 23.56 points or 1.85% lower at 1,250.13, its lowest close in more than two months. Decliners overwhelmed advancers by 846 to 82 while 152 counters were unchanged. Turnover increase to 940 million shares worth RM1.786 billion compared with 662 million shares worth RM1.286 billion on Monday.

The FBM KLCI opened with a down gap of 8.72 points at 1264.97 and fell to the intra-day low of 1247.85 before last minute buying support helped to push it back above the psychological support level of 1250. The key index formed a bearish long black candlestick which indicates heavy selling pressure and the bear was in full control for the day.

As it was mentioned in yesterday’s analysis, the 1250 level marked an important support for the current downtrend, as it represents the 78.6% Fibonacci retracement level as well as the psychological support level. If this level couldn’t hold, the key index might come down to test the support level of 1230 formed on February 9, a critical support level which happened to be the 23.6% Fibonacci retracement level for the full length of the up wave from the beginning of this bull-run. Subsequently, the lower key support levels lie at 1200 and 1150.

MACD slide down further, indicating an increase in downward momentum. RSI(14) at 17.22 is deeply oversold for the short term and is in the very bearish zone. Stochastic at 6.69 again hooked down, is indicating a very weak market which may continue to test lower support.

Technically, the FBM KLCI has turned into a bear market when it closes below the 200-day MA, which is now at 1267. However, having run up so much from the low of 836 in March 2009 to the current high of 1349, which marked a gain of 513 points, a 23.6% retracement of the gains or 121 points is still considered a normal correction from the longer term perspective. The short term trend of the benchmark index is currently down, but the underlying long term trend is still up.

Overnight, DJIA closed 22.82 or 0.23% lower at 10,043.75 after falling as much as 292 points to the intra-day low of 9774.48. The broader base S&P500 however, rose 0.38 (+0.04%) to close at 1074.73.

Today, the market is likely to remain cautious and the FBM KLCI is likely to trade within a range of 1225 to 1267.

This week's expected range: 1230 – 1322
Today’s expected range: 1225 – 1267

Resistance: 1256, 1261, 1267
Support: 1225, 1237, 1243

FBM KLCI - down with buying support

Stocks on Bursa Malaysia ended broadly lower yesterday on continued selling pressure, as investors trimmed their positions amid uncertainties in the global market. The FBM KLCI fell for seventh consecutive days to close 12.04 points or 0.94% lower at 1273.69, after losing as much as 21.62 points in the early hours, dragged down by heavy losses in SIME DARBY and PBBANK. Losers outpaced gainers by 415 to 252 while 285 counters were unchanged. Volume traded dropped to 664 million shares worth RM1.286 billion.

The FBM KLCI opened 2.77 points lower at 1,282.96 and hit the intra-day low of 1264.11, before bargain-hunting activities pushed the key index to close off-low. Chart wise, the benchmark index formed a black candlestick with long lower shadow which indicates heavy selling as well as the surfacing of buying support by the bargain-hunters.

As mentioned in yesterday’s analysis, the two important support levels to watch out for are the 61.8% Fibonacci retracement level at 1272 and the 200-day MA support at 1266, the key index had in fact punched through these two levels but bounced off to close just above the 61.8% Fibonacci level. If these two support levels can’t hold, then there is this likelihood that the index may come down to test the psychological support level at 1250, which happen to be the 78.6% Fibonacci retracement level.

MACD continued to slide down at a faster pace, indicating an increase in downward momentum. RSI(14) at 21.8 has moved into the very bearish zone, and is short term oversold, a technical rebound is expected anytime. Stochastic at 9.07 shows very weak market strength, but has hooked up, reflecting the rebound of the index off its low. Signals from the indicators still point towards a weak market ahead.

Overnight, DJIA closed 126.82 or 1.24% lower at 10,066.57. The FTSE +6.68 (+0.13%) to close at 5069.61 and GDAX -23.57 (-0.4%) to close at 5805.68.

Today, the market is likely to remain cautious and the FBM KLCI is likely to trade within a range of 1246 to 1288.

This week's expected range: 1230 – 1322
Today’s expected range: 1246 – 1288

Resistance: 1278, 1283, 1288
Support: 1246, 1255, 1265

FBM KLCI - correction and consolidation

Stocks on Bursa Malaysia gone through a week of serious correction with the benchmark FBM KLCI fell six days consecutively since two Fridays ago. Growing concerns over the Euro zone debt crisis and the possibility it may cause a contagion effect which may affect the global economic recovery, and a weaker report on the US labor market, on top of the continued tightening in monetary policy to curb property speculations by the Chinese government continued to haunt the global equity market.

After holding in the sideways range of1324 to 1349 for six weeks, the FBM KLCI eventually succumbed to the selling pressure last week and made a largest single week drop of 53.57 points since the bull-run started in April 2009. Week-on-week, the benchmark FBM KLCI fell 53.57 points to 1,285.73 from 1,339.3 the previous Friday. Weekly turnover declined slightly to 3.757 billion shares worth RM6.735 billion from 3.842 billion shares worth RM5.712 billion the previous week.

On the weekly chart, the FBM KLCI formed a bearish long black candlestick which indicates intense selling pressure. It broke the 1300 psychological support level by forming a large down gap on the daily chart last Friday. It is now resting on the 30-week moving average (MA) which had given the key index a strong rebound on the week of February 12, the 30-week MA is now at 1290.

The FBM KLCI is now at a critical support zone of 1280 to 1290, which happen to be the 50% Fibonacci retracement level of 1287 for the recent run up from February 9 till May 4, 2010 when the index hit the recent peak of 1349. If the key index could not rebound to stay above the critical psychological support level of 1300, then it might continue its downtrend to test the next 61.8% Fibonacci retracement level at 1272.

Weekly MACD continued to slide southward, indicating a pickup in downward momentum; nonetheless, it is still above its weekly zero-line, hence, the weakness could be just a short term correction. On the daily chart, the daily MACD has however, cross below its zero-line, indicating a deep correction is in action. Weekly RSI(14) at 49.68 has crossed below its 50 level, and move into the bearish zone. Daily RSI(14) at 24.95 has moved into the very bearish or oversold zone, a rebound may happen anytime. Weekly Stochastic at 73.39 has crossed below its slow stochastic line, and is below the 80 level, indicating a medium term down cycle for the benchmark index has begun. The daily Stochastic at 6.4 is in the oversold or very weak zone. Signals from the indicators point towards more weaknesses to come for the FBM KLCI.

For the short term, the FBM KLCI has turned downtrend. The longer term trend as indicated by the 200-day MA is still up. The 200-day MA at 1266 level is now the critical long term support for the key index, if the key index were to close below this long term MA support, then the market is considered to have turned bearish from the longer term perspective.

In view of a lack of fresh leads locally and the few uncertainties that continue to affect investors’ sentiments, the local market is expected to continue to track the direction of regional market, and may continue to correct and consolidate in this week.

As the Dow rebounded 125.38 points or 1.25% to close at 10,193.39 last Friday, this may help to stabilize the local market a little. This week, the FBM KLCI may trade within a range of 1230 to 1322, and for today it is likely to trade within a range of 1271 to 1300.

This week's expected range: 1230 – 1322
Today’s expected range: 1271 – 1300

Resistance: 1291, 1296, 1300
Support: 1271, 1376, 1281

FBM KLCI - heading south

Stocks on Bursa Malaysia ended mostly lower in a steadier trade yesterday after the plunge on Wednesday. The FBM KLCI fell 4.07 points or 0.3% lower to close at 1,304.16 after opening 3.37 points lower at 1,304.86. It had traded within the range of 1,300.44 and 1,309.13. Losers outpaced gainers by 449 to 250 while 274 counters were unchanged. Volume was slightly lower at 765 million shares worth RM1.414 billion.

The price action of the FBM KLCI formed a Doji candlestick, which indicates indecision and uncertainties of the market. The benchmark index tested the psychological support at 1300 before rebounding to close off low. However, the 1300 level looks fragile, if it can’t hold, the index may come down to its next lower support at 1292.

MACD continued to slide lower and is below its zero-line, indicating the downward momentum is gaining strength. RSI(14) at 31.38 is very weak and is in the bearish zone. Stochastic at 15.61 continued to slide lower into the short term oversold zone, this actually indicates the downward momentum is really gaining strength. Signals from the indicators are pointing towards more weaknesses ahead for the benchmark index.

As the FBM KLCI is now below it short and medium term moving averages (MA), the current trend is down. The longer term trend as indicated by the 120 and 200-day MA, nevertheless, is still up. The 120-day MA is currently at 1297 and the 200-day MA is at 1265.

In view of the bearish sentiments looming around global markets, the local bourse is expected to continue tracking the performances of regional markets. However, the expected better 1Q10 corporate results may give some buffer to the market.

Overnight, DJIA closed 376.36 points or 3.6% lower at 10,068.01.

Today, the FBM KLCI is likely to trade within a range of 1291 to 1313.

This week's expected range: 1290 – 1361
Today’s expected range: 1291 – 1313

Resistance: 1307, 1310, 1313
Support: 1291, 1296, 1300

FBM KLCI - to test critical support

Stocks on Bursa Malaysia ended broadly lower yesterday in line with losses in regional markets, taking cue from overnight’s heavy losses on Wall Street and the European markets amid fresh worries over the debt crisis in Euro zone.

The FBM KLCI ended 21.94 points or 1.65% lower at 1308.23, the largest single day drop since January 2010. It had opened 1.12 points lower at 1,329.05 with selling pressure intensifying as the day progressed. The sharp drop of RM1.02 or 5.8% in PPB share have further dampened the market sentiments. Losers overwhelmed gainers by 689 to 135 while 175 counters were unchanged. Turnover was slightly higher at 781 million shares worth RM1.403 billion from 690 million shares worth RM1.144 billion the day before.

Chart wise, the FBM KLCI formed a bearish long black candlestick that closed near the low of the day. This indicated heavy selling pressure when coupled with an increase in volume. The key index is currently resting on the support at 1308, and judging from the strong down move, it might continue its down move to test the critical psychological support level at 1300.

MACD continued its slide southward and has just crossed the zero-line, indicating the end of the bull move since March. RSI(14) at 33 has moved into the bearish zone, and is expected to slide down further. Stochastic at 31 continued to slide downward, indicating the pickup in downward momentum. Signals from the indicators point towards more weaknesses to come for the benchmark index.

The FBM KLCI has now closed below the 5, 10, 30 and 60-day moving averages (MA), it might continue its down move to test the longer term 120-day MA which is now at 1297. The long term 200-day MA is currently at 1265.

In view of the relatively bearish outlook in the global market with the Euro zone debt woes still unsettled, there could be more down side to come for the FBM KLCI.

Overnight, DJIA closed 66.58 points or 0.63% lower at 10,444.37

Today, the FBM KLCI is likely to trade within a range of 1280 to 1321.

This week's expected range: 1290 – 1361
Today’s expected range: 1280 – 1321

Resistance: 1312, 1315, 1321
Support: 1280, 1292, 1300

FBM KLCI - consolidation with downward bias

Stocks on Bursa Malaysia ended mixed yesterday on the lack of fresh market moving leads, and most major regional markets rebounded after recent falls. The FBM KLCI ended 4.10 points or 0.31% lower at 1330.17 after opening 1.0 point lower at 1,332.27, dragged down by losses mainly in MAYBANK, PLUS and PPB. Market breadth was negative for most part of the day, however, at close gainers led losers by 336 to 295 while 287 counters were unchanged. Turnover was slightly higher at 690 million shares worth RM1.144 billion.

Chart wise, the FBM KLCI formed an atypical black Harami candlestick. It opened with a one point down gap and move to the intra-day low of 1327.05, however, it did not penetrate yesterday’s low making it enclosed within yesterday’s range, hence, forming a Harami candlestick. This indicates there were some continued selling, however, the selling was not strong enough to make a new low, signifying buying support around 1326 level.

MACD continued to slide lower, indicating the downward momentum continued to gain strength. RSI(14) at 45.99 continued to move lower into the bearish zone. Stochastic at 55.26 continued to slide lower, indicating the down cycle is gaining strength. Confluence of the indicators’ signals point to further downside or continued consolidation of the benchmark FBM KLCI.

The short term trend is down, medium term trend is sideways while the longer term trend remained up. The key index is currently below its short term 5, 10 and 30-day moving averages (MA), the 10-day MA already start to cross below the 30-day MA, hence, exerting downward pressure on the key index.

The key index is now resting right on the support zone of 1324 to 1330. If the key index closes below the current support at 1330, it may continue to test lower support zone. Immediate lower support for the key index is found at 1324, 1321 and 1315.

Overnight, DJIA closed 114.88 points or 1.08% lower at 10,510.95.

Today, the FBM KLCI is likely to trade within a range of 1321 to 1340.

This week's expected range: 1290 – 1361
Today’s expected range: 1321 – 1340

Resistance: 1333, 1336, 1340
Support: 1321, 1324, 1327

FBM KLCI - lower but well supported

Stocks on Bursa Malaysia ended broadly lower yesterday in tandem with weak performances across key regional bourses, as investors took the cue from the fall on Wall Street last Friday. The FBM KLCI opened 2.06 points easier at 1,337.24 and hit the intra-day low of 1326.96 before rebounding to close 5.03 points or 0.38% lower at 1,334.27. Losers overwhelmed gainers by 557 to 187 while 194 counters were traded unchanged. Total turnover dropped to 633 million shares, valued at RM1.008 billion, from last Friday's 682 million shares worth RM1.084 billion.

The price action of the FBM KLCI formed a hammer-like candlestick which indicates buying support when the key index moves into the support zone of 1324 to 1330. The key index is currently below the short term 5, 10 and 30-day moving averages (MA), which now formed the overhead resistance at 1338 to 1341. The immediate critical support for the index lies at 1330 and 1324, if the lower support at 1324 is broken, then the index will move lower to test another support zone at 1321 to 1315.

MACD continued to slide lower indicating the pickup in downward momentum; nonetheless, it is still above its zero-line, signifying the weakness is just a short term consolidation. RSI(14) at 49.31 has cross below the 50 level, and is into the mildly bearish zone. Stochastic at 71.55 has crossed below its slow Stochastic, indicating a down cycle is beginning. Signals from the indicators point to possible further weakness in the near term.

As the FBM KLCI is currently below the short term 5, 10 and 30-day MA, the immediate short term trend is down. The medium and longer term trend as indicated by the 60 and 120-day MA, however, is still up.

As external problems in the Euro zone remained unsettled, on top of the concerns over the credit tightening measures in China, and a lack of fresh leads locally, the local bourse is expected to continue its consolidation in the near term. However, expected better 1Q10 corporate results may help to buffer some selling pressure.

Overnight, DJIA closed 5.67 or 0.05% higher at 10,625.83.

Today, the FBM KLCI is likely to trade within a range of 1321 to 1344.

This week's expected range: 1290 – 1361
Today’s expected range: 1321 – 1344

Resistance: 1337, 1340, 1344
Support: 1321, 1325, 1330

FBM KLCI - consolidation

After a volatile first week in May, the benchmark FBM KLCI staged a follow-through technical rebound in tandem with gains in regional markets when the European Union made available an unprecedented loan package of up to 500 billion euros with an additional 250 billion euros from the IMF to salvage the highly indebted PIIGS countries in the Euro Zone.

The benchmark index opened last week slightly lower but quickly shrugged off the weakness and rally to the intra-week high of 1348.09 on last Thursday. However, the key index suffered losses of 7.62 points last Friday to close at 1339.30, dragged down by Sime Darby which reported huge cost overruns of nearly RM1 billion from its energy and utility projects.

Despite the strong 1Q10 GDP growth of 10.1% released on last Thursday evening, which was the fastest growth in a first quarter since year 2000, the market continued to stay in the red last Friday. Bank Negara Malaysia raised its overnight policy rate by 25 basis points to 2.5%, to head off any potential inflationary threat and normalize its monetary policy post credit crisis.

On a week-on-week basis, the benchmark FBM KLCI rose 6.48 points to 1,339.3 from 1,332.82. Weekly turnover increased to 3.842 billion shares worth RM5.712 billion from the previous week's 3.547 billion shares worth RM7.014 billion.

On the weekly chart, the FBM KLCI formed an inverted hammer-like candlestick which indicates some selling pressure when the key index approached the resistance zone of 1350 level. The key index attempted to challenge the recent high of 1349.92 registered on 4th of May recently, but failed to break through it when it only managed to touched the intra-week high of 1348.09. With this, the benchmark FBM KLCI is likely to continue its consolidation in the coming week.

Weekly MACD continued to slide lower with its histogram gaining length in southward direction, indicating the consolidation mode of the key index. Weekly RSI(14) at 67 has hooked up, is still in the bullish zone. Weekly Stochastic at 92, continued to stay in the overbought zone, has tapered off, but is still above its weekly slow Stochastic. Mixed signals from the indicators are pointing towards a consolidation in the immediate term.

The FBM KLCI is currently resting on its 5 and 10-week moving averages (MA). On the daily chart, it is, however, below its 5 and 10-day MA but resting on the 30-day MA which is at 1338, a close below this level will see the key index move lower to re-test the support zone at 1324 to 1330. The medium to longer term trend, as indicated by the 60 and 120-day MA is, nonetheless, still up. As the longer term trend is still remain up, any short term weakness should be viewed as an opportunity to accumulate quality shares at lower prices

For this week, in view of a lack of fresh leads locally and the continued speculation of Sime Darby’s losses, on top of still fragile overseas markets, the FBM KLCI is likely to correct or consolidate. However, corporate results that will be release over the next two weeks may give some guidance to the direction of the benchmark index.

As the Dow fell another 162.79 points or 1.51% to close at 10,620.16 last Friday, the local market is expected to face some volatility today. This week, the FBM KLCI may trade within a range of 1290 to 1361, and for today it is likely to trade within a range of 1324 to 1348.

This week's expected range: 1290 – 1361
Today’s expected range: 1324 – 1348

Resistance: 1342, 1345, 1348
Support: 1324, 1328, 1333

An update of the stock picks:
(Click to enlarge image)

FBM KLCI - looking a little toppish

Stocks on Bursa Malaysia ended firmer yesterday following report of the country's strong economic growth of 10.1 per cent for the first quarter, it marked the highest first-quarter performance since 2000 which was at 11.7 per cent. The FBM KLCI rose 2.82 points or 0.21% higher to close at 1346.92. The gain was contributed mostly by Maybank. Gainers outpaced losers by 396 to 253 while 284 counters were unchanged. Volume increased to 905 million shares worth RM1.039 billion compared with 666 million shares worth RM934 million the day before.

The FBM KLCI opened 1.55 point higher and traded lower to touch the intra-day low of 1344.27 before rebounding to hit the intra-day high of 1348.09, and finally settled at 1346.92, the highest close in two years. It was in the positive territory throughout the day. The price action of the key index formed a white spinning-top candlestick which indicates indecision of the key index to move higher. The appearance of a Doji like spinning-top candlestick after five consecutive days of up move may forewarn of a possible top.

MACD continued to move higher, albeit still below its trigger line, indicating a gradual pickup of the upward momentum. RSI(14) at 61.49 continued to move higher, and has just move into the mildly bullish zone. Stochastic at 82.48, continued to surge upward and has now entered the short term overbought zone. Signals from the indicators reflected the current short term up-move of the benchmark index.

The FBM KLCI is now above all its short, medium and long term moving averages, indicating the benchmark index is in a positive mode. Nonetheless, it is now faced with the immediate strong psychological resistance level at 1350. It has to clear the resistance zone at 1350 to 1354 plus and increase in trading volume to above 1 billion shares before a bull run towards 1380 can take place.

After the announcement of the better than expected first quarter economic growth, the market will now look forward to the corporate results that will be release over the next two weeks for the direction.

Today, the FBM KLCI is likely to trade within a range of 1341 to 1351

This week's expected range: 1283 – 1367
Today’s expected range: 1341 – 1351

Resistance: 1348, 1350, 1351
Support: 1341, 1343, 1345

FBM KLCI - positive outlook

Stocks on Bursa Malaysia ended slightly higher yesterday on expectations of a better first-quarter performance in the country's economy. The FBM KLCI drifted in a narrow range and stayed in the negative territory most of the time before last hour buying pushed it to close 3.38 points or 0.25% higher at 1344.10. Gainers led losers by 362 to 241 while 291 counters closed unchanged. Volume declined to 666 million shares worth RM934 million compare with 781 million shares worth RM1.343 billion on Tuesday.

The FBM KLCI formed a small body white candlestick with long lower shadow and closed at the highest point of the day, indicates low volatility with a positive outlook. The key index is now testing the resistance zone of 1344 to 1354, in which it has failed in its last two attempts to cross the 1350 psychological resistance level. From the waning volume, it looks like the selling pressure currently is not as strong as the previous two attempts. Hence, the key index might have a good chance to move through this resistance level.

MACD continued to move higher, albeit still below its trigger line, indicates a gradual pickup in upward momentum. RSI(14) at 59.48 continued to move higher, is still in its neutral to mildly bullish zone. Stochastic at 69.89 continued to move higher indicating the continuation of the up cycle. Positive readings of the indicators point towards a positive outlook of the FBM KLCI in the near term.

The FBM KLCI is now above all its short, medium and long term moving averages, indicating the benchmark index is in a positive mode. Nonetheless, it still has to clear the resistances at 1350 to 1354 plus and increase in trading volume to above 1 billion shares before a bull run towards 1380 can take place.

Bank Negara Malaysia is expected to release the first-quarter GDP data today together with the monetary policy statement on the Overnight Policy Rate. Foreign and local research houses had predicted the Malaysian economy will grow by between 6 and 7 per cent for the first quarter, and this may give some boost to the local market.

Today, the FBM KLCI is likely to trade within a range of 1334 to 1350

This week's expected range: 1283 – 1367
Today’s expected range: 1334 – 1350

Resistance: 1346, 1348, 1350
Support: 1334, 1336, 1340

BCorp acquires 70pc of Ascot Sports for RM525m

Berjaya Corp Bhd (BCorp) (3395), a gaming, property and hospitality group, will buy a 70 per cent stake in a private sports betting company owned by its chairman Tan Sri Vincent Tan (picture) for RM525 million.

BCorp told Bursa Malaysia yesterday that it plans to purchase a controlling stake in Ascot Sports Sdn Bhd, which has been re-issued a conditional sports betting licence by the Finance Ministry.

Ascot Sports is presently 70 per cent owned by Tan, while the balance is owned by his son Datuk Robin Tan.

Tan has also agreed to guarantee that the company will make a cumulative net profit of at least RM375 million for the first three years of operations.

To back this profit guarantee, he has offered to deposit RM81.25 million worth of listed securities and BCorp will withhold RM125 million cash from the total purchase price.
Therefore, BCorp's initial consideration will be RM400 million.

BCorp will finance the purchase by undertaking a renounceable rights issue of up to RM614.46 million nominal value of 10-year eight per cent irredeemable convertible unsecured loan stocks (Iculs).

It will be done on the basis of one RM1 nominal value of Iculs for every eight BCorp shares owned.

"A portion of the funds raised will be used to pay the initial consideration of RM400 million with the remaining to be deployed for working capital of the group," BCorp said in a statement yesterday.

It added that Tan has undertaken to subscribe to his and his private companies' entitlements in full, which would amount to at least RM400 million.

He will not net in any cash as he will reinvest the entire initial consideration to be received to honour his rights issue obligations.

Ascot Sports, which is currently a dormant company but set to be the next big money spinner for BCorp, recorded net liabilities and net loss of RM11.2 million and RM4.6 million respectively for the financial year ended December 31 2008.

BCorp said the value accorded to Ascot Sports based on 100 per cent interest is RM750 million. Therefore, its cash consideration represents a price-to-earnings multiple of six times based on the average net profit per year of RM125 million.

"Comparing examples in Singapore and Hong Kong where legalised sports betting has been in operation for a number of years, the market is seeing consistent double- digit compound growth rates," BCorp said.

It added that Hong Kong Jockey club had revenues of about HK$35 billion (about RM15 billion) while Singapore Pools revenue is estimated at a few billion Singapore dollars.

BCorp said the high barriers to entry and low competitive pressure will provide a highly stable business environment for Ascot Sports to sustain and grow its business. It also has the first-mover advantage in setting up licensed sports betting operations in Malaysia.

Source:
By Jeeva Arulampalam, Business Times

FBM KLCI - rebound fizzles out

Stocks on Bursa Malaysia ended mixed yesterday on profit-taking after two days of rebound. The benchmark FBM KLCI, however, managed to break and stayed above the 1340 resistance level to close 6.75 points or 0.51% higher at 1340.72. Losers led gainers by 399 to 302 while 272 counters were unchanged. Volume traded was lower at 781 million shares worth RM1.343 billion.

Chart wise, the FBM KLCI formed a bullish white candlestick which pierced through the various short terms, i.e. 5, 10 and 30-day moving averages which formed the overhead resistance. It also closed the down gap formed four days ago. With this steady up move, the key index is expected to move higher to re-test the recent high of 1349.

MACD has hooked up after four days of downward sliding, indicating a possible reversal of the downward momentum. RSI(14) at 56.98 continued to move higher and has turned mildly bullish. Stochastic at 58.99 has also hooked up and crossed above its slow Stochastic, signaling a possible beginning of another up cycle. Confluence of the indicators signals point to a possible further upside for the FBM KLCI.

Now, the short term trend of the key index has just turned up, with the underlying medium and longer term trend continue to stay up.

Immediate overhead resistance zone of the FBM KLCI remained at 1349 to 1354 with 1350 as the key psychological resistance level. If the key index is able to break above the 1350 level, it might trigger a short term rally. The underlying immediate support zone remained at 1330 to 1324.

The FBM KLCI may continue to stay within the current trading range of 1324 to 1349 as many investors may stayed on the sidelines ahead of Malaysia's first quarter gross domestic product figure which is expected to be out by end of this week.

Today, the FBM KLCI is likely to trade within a range of 1325 to 13501

This week's expected range: 1283 – 1367
Today’s expected range: 1325 – 1351

Resistance: 1344, 1348, 1351
Support: 1325, 1329, 1335

FBM KLCI - rebounded in tandem with regional recovery

Stocks on Bursa Malaysia ended broadly higher yesterday in tandem with rebound in regional bourses on news that that the European Union is making available an unprecedented loan package of up to 500 billion euros with an additional 250 billion euros from the IMF in attempts to head off further speculation against highly indebted member countries (PIIGS) of the Euro zone.

The benchmark FBM KLCI opened 1.29 point lower, however, it quickly move into positive territory and touched an intra-day high of 1337.20 before last minute profit taking pressed it off-high to close 1.08 point or 0.08% higher at 1333.97. Gainers outpaced losers by 529 to 194 while 217 counters were unchanged. Volume traded was lower at 805 million shares valued at RM 1.309 billion.

Chart wise, the FBM KLCI formed an inverted hammer candlestick which indicates buyers were initially dominant in pushing the index up, but seller later surfaced to sell in down. However, the sellers were not strong enough to send the key index into the negative territory, hence; the buyers were still slightly more dominant.

The FBM KLCI has been able to stay above the 1330 level quite well; however, it still faced considerable resistance when it tries to move higher. Immediate overhead resistances post by the short term moving averages (MA) and the down-gap formed recently is at 1335 to 1342, and the psychological resistance level at 1350 is still a main hurdle for the key index.

MACD continued to slide lower indicating the downward momentum is still in force. RSI(14) at 51.44 has bounced above the 50 level, and is in the neutral zone. Stochastic at 47.53 has hooked up but still below its slow Stochastic indicated a technical rebound. Mixed signals from the indicators indicated that the key index is in a corrective consolidation mode.

The FBM KLCI is in the sideway trend for the short term. The medium to longer term trend, nonetheless, is still up.

Key levels to watch are the immediate support zone at 1330 to 1324, whereas, the immediate overhead resistance zone is at 1340 to 1350.

In view of the strong overnight close of 404 point rise on the DJIA, the local bourse is expected to stage a follow-through rebound today to test higher resistance levels.

Today, the FBM KLCI is likely to trade within a range of 1324 to 1344.

This week's expected range: 1283 – 1367
Today’s expected range: 1324 – 1344

Resistance: 1337, 1340, 1344
Support: 1324, 1328, 1331

FBM KLCI - volatile week ahead

After closing the month of April on a high note with the FBM KLCI closing at 1346.38, registering a two-year fresh high, stocks on Bursa Malaysia went through a volatile first week for the month of May. Is the market reacting to the axiom “Sell your share in May and go away”? It remained to be seen. However, external factors such as the deepening of the Greece’s sovereign debt problems, continued credit tightening measures imposed by the Chinese government to curb speculation in its property sector has weighed on the performance of the regional markets, and Bursa Malaysia cannot be spared too.

The FBM KLCI started last week with signs of heavy profit-taking when it couldn’t sustain its rise after hitting the intra-week high of 1349.92. The benchmark index went into a correction mode and hit the intra-week low of 1315.63 on last Friday after opening 16 points lower, reacting to the overnight plunge of the Dow on last Thursday, which actually fell as much as 1000 points during the trading session but managed to recover to close 348 points lower. However, the FBM KLCI was quite resilient, bargain-hunting activities actually helped to bring the key index off its low to register a small gain of 1.02 points to close last Friday at 1332.89, when the rest of the world are closing the week in deep red. Week-on-week, the key index posted a loss of 13.49 points, or 1%. Weekly turnover declined to 3.55 billion shares, valued at RM7.014 billion, from previous week's 4.39 billion shares worth RM5.71 billion.

On the weekly chart, the FBM KLCI formed a bearish black candlestick with a long lower shadow which indicates heavy selling pressure when the shadow registered a lower low compared with the previous week’s candlestick. For the first time in an eleven week rally, the key index has closed below its 5-week moving average (MA). If it cannot maintain above the 5-week MA which is now at 1337, it might further correct downward. The immediate support zone now lies at 1315 to 1330, if this zone is breach, then the key index is likely to move downward to test its next lower critical support zone at 1300 to 1308. The overhead resistance remained at 1350, which is not likely to be broken in the immediate term.

Weekly MACD again crossed below its trigger line, reflecting the current correction mode of the benchmark index. Weekly RSI(14) at 65.95 has crossed below the 70 level from its reading of 71 the previous week, indicating weakness in the brewing. Weekly Stochastic at 92 is short term overbought, has hooked down but is still above its slow Stochastic. Signals from the indicators are pointing towards a high possibility of correction in the immediate term.

For the short term, the FBM KLCI is currently below its 5, 10 and 30-day MA, hence it might face some downward selling pressure. The underlying medium and longer term trend, as indicated by the 50, 60, and 120-day MA, nonetheless, is still up. As the longer term trend is still remain up, any short term weakness should be viewed as an opportunity to accumulate quality shares at lower prices

For the coming week, in view of the negative external factors remain unsettled and a lack of fresh leads locally, the FBM KLCI is expected to continue its correction mode, and track the direction of regional bellwether indices. However, the expected improve economic data, and better corporate results may give some buffer to the correction.

As the Dow fell another 139.89 points or 1.33% to close at 10,380.43 on last Friday, the local market is expected to face some volatility today. This week, the FBM KLCI may trade within a range of 1283 to 1367, and for today it is likely to trade within a range of 1308 to 1345.

This week's expected range: 1283 – 1367
Today’s expected range: 1308 – 1345

Resistance: 1337, 1341, 1345
Support: 1308, 1315, 1324

Stock to watch: BJCORP, BJCORP-LC, BJTOTO, MPHB, TANJONG

An update of the stock picks:
(Click to enlarge)

FBM KLCI - more downside to come

Stocks on Bursa Malaysia extended losses yesterday as investors continued to fear over the impact of Greece’s debt crisis and the contagion spreading to other countries with high public debts. On top of that, further credit tightening measures by the Chinese government also caused the Shanghai Composite index to tumble as much as 4.1% yesterday. The Nikkei index in Japan tumbled 3.3% upon resumption of trade after the exchange was closed for a three-day holiday.

The FBM KLCI opened lower but managed to climb into the positive territory in the morning session, but selling pressure that surfaced after lunch break sent the benchmark index into the negative territory to close 3.78 points or 0.28% lower at 1331.87. Losers overwhelmed gainers by 644 to 137 while 233 counters were unchanged. Volume traded was slightly higher at 899 million shares worth RM1.578 billion.

Chart wise, the FBM KLCI formed a bearish black spinning-top candlestick which indicates indecision of the benchmark index to move further after a strong rebound the previous day, and re-surfacing of the bears that pushed the index back to the negative territory. The key index however, managed to close above the 1330 support level.

MACD slid down further indicating the pickup in downward momentum. RSI(14) at 49.62 has slipped into the bearish zone, the first time in two month, indicating further weakness is ahead. Stochastic plunged to 54 from 73 the previous day, indicating the pickup in downward strength and the continuation of the down cycle. Signals from the indicators indicate more weaknesses is expected ahead for the FBM KLCI.

The short term trend has turned bearish as the key index is now below the 5, 10, 20 and 30-day moving averages (MA). The medium to longer term trend as represented by the 60 and 120-day MA is still up.

The important support level to watch is the immediate support at 1330 and 1324 levels which have given good support to the key index recently. If these two levels are broken, then, further downside is expected. The next lower support levels lie at 1321, 1312 and 1308.

In view of the 347 points or 3.2% plunge of the Dow Jones Industrial Average (DJIA) overnight, it is expected that the local market will face strong volatility.

Today, the FBM KLCI is likely to trade within a range of 1308 to 1340

This week's expected range: 1307 – 1372
Today’s expected range: 1308 – 1340

Resistance: 1334, 1337, 1340
Support: 1308, 1315, 1321

FBM KLCI - surfacing of buying support

Stocks on Bursa Malaysia ended broadly lower across the board yesterday in tandem with weak regional markets following sharp losses on Wall Street and in European markets overnight. The FBM KLCI fell as much as 18 points at the open but gradually regained lost ground as the day progressed to close 7.24 points or 0.54% lower at 1335.69. Losers outpaced gainers by 531 to 193 while 257 counters were unchanged. Volume traded was higher at 861 million shares worth RM1.522 billion.

Chart wise, the FBM KLCI formed a white candlestick despite closing 7 points lower from previous day’s close, which indicates buyers were dominant in buying up blue-chip shares which pushed the key index 10 points up from the day’s low to close near the day’s high. The benchmark index has also managed to close above the 1330 critical short term support level and the 30-day moving average (MA) when it close at 1335.65, hence, the short term uptrend remained intact. It is however, below the 5 and 10-days MA, and these two MAs which now lie at 1340 will form the overhead resistance to the upside.

MACD slide lower which indicates the increase in downward momentum. RSI(14) at 52.79 slide lower into the neutral zone. Stochastic at 73 has crossed below its slow Stochastic decisively, and this probably marks the beginning of a short term down cycle of the FBM KLCI.

As the FBM KLCI is now below its short term 5 and 10-day MAs but above the 30-day MA, it may probably goes into a sideway mode bouncing between 1330 and 1340 provided that it can hold well above the 1330 level. The 1324 level has also become an important support level to watch as it has shown good support twice at this level over the last six days. The underlying medium and longer term trend, however, still remained up.

In view of the still unsettled Euro Zone debt problems and concerns over the impact of China’s credit tightening measures, the market may continue to stay volatile in the short term. However, improve economic data and corporate results may help to buffer the negative impacts.

Today, the FBM KLCI is likely to trade within a range of 1316 to 1348

This week's expected range: 1307 – 1372
Today’s expected range: 1316 – 1348

Resistance: 1340, 1344, 1348
Support: 1316, 1321, 1328

FBM KLCI - toppish reversal

Stocks on Bursa Malaysia ended broadly lower yesterday despite strong rally on Wall Street overnight, on concerns over China’s credit tightening measures which weighed down market sentiments across the regions. The FBM KLCI closed 4 points or 0.3% lower after opening 1.47 points higher at 1348.36. It touched the high of 1349.92 before profit-taking activities sent it lower. Losers overwhelmed gainers by 555 to 176, while 285 counters were unchanged. Volume traded was slightly lower at 767 million shares worth RM1.068 billion.

The FBM KLCI formed a bearish dark-cloud-cover candlestick pattern, which is a top reversal pattern and indicates further weakness is ahead. The benchmark index might take an excuse to correct downward after such a long rally. Judging from the price action, 1349, the intra-day high may well be the current market top.

MACD re-hooked down which indicates the downward momentum is re-gaining strength and continued weakness is expected ahead. RSI(14) at 59.55 has also hooked downward, signaling the weakening of market strength. Stochastic at 87.8 is higher into the short term overbought zone and is tapering off, signaling the slow down in short term upward strength and may make a turn soon. Signals from the indicators are pointing towards weakness in the brewing, and may see the index correcting itself.

Immediate support zone lies at 1330 to 1340 which coincides with the 10 and 30-day moving averages. 1330 is a critical short term uptrend support level, if the key index is able to maintain above this level, it is fine, and otherwise, we may see more downside. If 1330 level can’t hold, the next lower support levels lie at 1321, 1316 and 1308. Critical long term support zone lies at 1280 to 1300.

The underlying short, medium and longer term trend of the FBM KLCI as indicated by the various moving averages is still up.

In view of the lack of fresh leads, weaknesses that has already surfaced in regional bellwether indices and weak signals from the technical indicators, the FBM KLCI is expected to correct downward in the near term. As the long term uptrend is still intact, a short term correction should be view as an opportunity to collect quality stocks at lower price level.

Today, the FBM KLCI is likely to trade within a range of 1328 to 1350.

This week's expected range: 1307 – 1372
Today’s expected range: 1328 – 1350

Resistance: 1345, 1348, 1350
Support: 1328, 1331, 1337

FBM KLCI - closed marginally higher

Stocks on Bursa Malaysia ended broadly lower today on weak sentiments following Wall Street’s weak performance last Friday. Regional bourses were also mainly in the red. The FBM KLCI opened the first trading day of May 2.14 points lower at 1,344.24 and touched the intra-day low of 1340.26 before buying support on selected blue-chips pushed the benchmark index to close 0.51 of a point or 0.04% higher at 1,346.89. Market breadth was negative throughout the day with losers beating gainers by 456 to 254, while 268 counters were unchanged. Turnover was lower at 771 million shares valued at RM1.031 billion.

Chart wise, the FBM KLCI formed a white candlestick with long lower shadow, it indicates buying support from the bulls after the bear sold down the market in the early part of the day. The key index in fact closed at another two-year high since March 3, 2008. It is now struggling trying to clear the immediate strong overhead resistance at the 1347 to 1354 zone.

MACD continued to move higher despite still below its trigger line, indicating a gradual pickup in daily market momentum. RSI(14) at 63.75 turned flat but still in the bullish zone. Stochastic at 85 is gaining strength, continued to move higher and is now entering the short term overbought or bullish zone. Readings from the indicators indicates the FBM KLCI is turning bullish gradually and might continue to move higher.

The underlying short, medium and long term trends of the FBM KLCI remained up as the key index is currently staying above all the moving averages.

In view of the continue release of corporate earnings results in this month, the performance of the FBM KLCI will very much depend on those figures, while the developments in overseas market will also continue to dictate the main direction of the key index. Rotational play on the second and third liners is likely to continue.

Today, the FBM KLCI is likely to trade within a range of 1335 to 1355.

This week's expected range: 1307 – 1372
Today’s expected range: 1335 – 1355

Resistance: 1349, 1352, 1355
Support: 1335, 1338, 1342

FBM KLCI - highest close in two years

Stocks on Bursa Malaysia went through quite a volatile move last week. The FBM KLCI started last week on a consolidation mode on Monday and Tuesday. It had a knee-jerk reaction on Wednesday when the Dow plunged 213 points overnight and hit the intra-week low of 1324.34 on fear that the Euro-zone debt problems might worsen when Greece and Portugal’s debt rating was downgraded. The key index recovered quickly on Thursday to 1335.86 when the Dow rebounded amid positive US economic data and corporate earnings, and on hopes that Greece was close to a bailout deal.

On Friday, the FBM KLCI rose in tandem with regional markets to close the month of April on a positive note at 1346.38, a two-year new high since March 3, 2008, making a gain of 25.81 points on a month-on-month basis. Week-on-week, the FBM KLCI advanced 9.6 points to 1,346.38 from 1,336.78 the previous Friday, and weekly turnover increased to 4.39 billion shares, worth RM5.71 billion, from previous week's 4.14 billion shares worth RM5.85 billion.

On the weekly chart, the FBM KLCI formed a bullish continuation candlestick that closed the week near its weekly high, breaking out from its three weeks long consolidation. With the strong up move on last Friday, the key index in expected to continue its upward momentum to move higher to test the psychological resistance level of 1350. If it can successfully move through the immediate resistance zone of 1347 to 1354, it might move higher to test the 1382 level.

The FBM KLCI is currently staying above its short term 5-week and medium term 10-week moving averages (MA), which indicate the current trend is up. The longer term trend as indicated by the 30-week MA remained strongly up.

Weekly MACD continued to move higher as shown by the longer histogram in the positive zone after making a golden-cross last week, indicating the continued buildup of upward momentum. Weekly RSI(14) at 71.69 too has move higher into the very bullish zone. Weekly Stochastic at 92.58 has also hooked up, signaling the continuation of the up cycle. A confluence of positive signals from the technical indicators is pointing to more upside potential of the benchmark index.

For the coming week, in view of the lack of market impetus, the benchmark FBM KLCI will continue to take cue from the performance of major regional markets, and the corporate quarterly results that are continuously being release in May will also influence the performance of the key index.

As the Dow fell 158.71 points or 1.42% to close at 11,008.61 on last Friday, the local market is expected to face some volatility today. This week, the FBM KLCI may trade within a range of 1307 to 1372, and for today it is likely to trade within a range of 1331 to 1358.

This week's expected range: 1307 – 1372
Today’s expected range: 1331 – 1358

Resistance: 1350, 1354, 1358
Support: 1331, 1335, 1341

An update of the stock picks:
(click to enlarge image)