Stocks on Bursa Malaysia closed mixed last Friday on continued profit-taking and losses among heavyweights. The benchmark FBM KLCI reached a new two-and-a-half year high on Tuesday, buoyed by strong performance in regional markets and following the announcement of the government's ETP. However, profit-taking emerged for the following three consecutive days, with heavyweight stocks recording heavy losses. The benchmark FBM KLCI lost 15.78 points or 1.08% to 1,451.19, week-on-week, from 1,466.97 the previous week. Weekly turnover rose to 5.958 billion shares worth RM7.865 billion from 3.575 billion shares worth RM7.460 billion the previous week.
The FBM KLCI opened 3.76 points higher at 1470.73 on last Monday and went into a correction mode for most part of the day before rebounding to close off low at 1469.69. On Tuesday, the key index continued its rebound from Monday to close 6.3 points higher at 1475.99, charting a new two-and-a-half-year high on the back of the announcement of the government’s Economic Transformation Programme. The FBM KLCI paused to consolidate within a tight trading range on Wednesday to close 1.24 points lower at 1474.75 after hitting an intra-day high of 1479.44. The benchmark index suffered heavy loss of 16.67 points to 1458.08 on Thursday as the market sentiments weakened, marking the first deep correction in 2 two months. On Friday, the key index continued its down move to hit the intra-week low of 1445.33 before rebounding to close 6.89 points lower at 1451.19.
On the weekly chart, the price action of the FBM KLCI formed a dark-cloud-cover candlestick pattern which indicates profit-taking and correction. It, however, is still staying above the 5-week moving average (MA) which is now at 1440, indicating the underlying short term trend remained up. If the key index closes below the 1440 level, then it will move lower to test the support at 1428.
On the daily chart, the FBM KLCI formed a Doji candlestick with long lower shadow in a possible star position, and the fact that the key index is able to rebound to close above the 1450 psychological level, there’s a high chance that it may continue to move upward. However, it may meet strong resistance posted by the 5 and 10-day MA at 1463 to 1465 area.
Weekly MACD continued to climb higher but at a slower pace, as shown by the shorter histogram, indicating a slow down in the medium term upward momentum. Daily MACD, however, continued to fall lower after making the “dead-cross” on last Thursday, indicating a pick up in the short term downward momentum.
Weekly RSI(14) at 73.7 has fell from the high of 79.6 registered on the previous week, reflecting the current correction. It is, nonetheless, still bullish in the medium term perspective. Daily RSI(14) at 60.8 continued to slide lower from the recent high reading of 86 registered on September 14, reflecting the rapid correction and is now at the edge of the mildly bullish zone.
Weekly Stochastic at 91.5 continued to slide lower and is below its weekly slow Stochastic, reflecting the continuous loss in weekly momentum. Daily Stochastic at 65 continued to slide lower, indicating the continuation of the short term down cycle.
Signals from the indicators are indicating that the medium term upward momentum of the FBM KLCI is slowing down; whereas for the short term, the key index is undergoing a correction which has just begun and might continue in the coming week.
The FBM KLCI is now staying below the short term 5 and 10-day MA, which indicates short term downtrend. The medium to longer term uptrend is, however, still very much intact. An important moving average to watch is the 30-day MA which is currently at 1422. The key index has been able to stay above this MA in the last three months when it corrects, if the key index could not hold above the 30-day MA in the current correction, it might move further downward to the 1400 level.
For this week, the FBM KLCI is likely to be range-bound or consolidate as investors might adopt a wait-and-see attitude amid prevailing concerns about weaknesses in the US and European economies. Immediate support level is at 1428 to 1441 while the overhead resistance zone is at 1463 to 1480.
The Dow rose +197.84 points or +1.86% higher to close at 10,860.26 on last Friday. This week, the FBM KLCI may trade within a range of 1403 to 1514, and for today it is likely to trade within a range of 1437 to 1463.
This week's expected range: 1403 – 1514
Today’s expected range: 1437 – 1463
Resistance: 1455, 1459, 1463
Support: 1437, 1441, 1446
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