Stocks on Bursa Malaysia went through a week of correction and consolidation last week, in line with regional trend. The FBM KLCI staged a mild rebound last Friday to close 2.36 points or 0.16% higher at 1499.88 after two days of sell off. Week-on-week, the benchmark index lost 7.4 points compared to the previous Friday’s close of 1507.28. Weekly volume rose to 5.865 billion shares, worth RM8.725 billion, from 4.968 billion shares, valued at RM8.94 billion the previous week.
The FBM KLCI opened 4.54 points higher at 1511.82 last Monday after strong gains on Wall Street the previous Friday improved investor sentiment, and close 2.51 points higher at 1509.79. On Tuesday, Stocks ended mixed in range-bound trading, but persistent buying interest in small-and medium-capitalized counters such as plantation, election-themed, oil and gas stocks helped sustained the local stock market, and the FBM KLCI rose 0.79 point to 1510.58. On Wednesday, stocks closed lower on selling pressure in line with losses in regional bourses. However, continued buying interest in heavyweights helped narrow overall losses, and the FBM KLCI fell 1.48 points to close at 1509.12. Stocks on Bursa Malaysia ended broadly lower on Thursday on extended sell-off amid weak trading across global markets, and the FBM KLCI fell 11.58 points to 1497.52. On Friday, the key index rebounded 2.36 points to close the week at 1499.88.
On the weekly chart, the FBM KLCI formed a bearish engulfing candlestick which indicates sellers were dominant throughout the week. The key index has been trading sideways between the high of 1532 and the low of 1474 over the last eight weeks, and is expected to continue doing so. The key index is closing right below the 5 and 10-week moving averages (MA) which are currently at 1501 and 1500, and they will likely exert selling pressure on the key index and press it lower.
On the daily chart, the FBM KLCI formed a small white candlestick which indicates weak rebound and consolidation. It temporary found support at 1495, and is currently closing below all the short term 5, 10, 20 and 30-day MAs, these MAs will continue to act as resistance to the up move and will continue to exert selling pressure on the key index. If the key index breaks the immediate support at 1495, it will move lower to test its next support at 1488 and 1474.
Weekly MACD continued to move lower after making a dead-cross two weeks ago, this indicates the continued loss in the weekly upward momentum, and is moving into medium term sideways consolidation. Daily MACD too has made a dead-cross and is moving lower, and indicates short term correction and consolidation.
Weekly RSI (14) continued to move lower and is currently at 69.6, which shows that the weekly market strength is reducing from the very bullish to the bullish state. Daily RSI (14) at 49.1 has hooked up slightly, and is neutral to weakly bearish.
Weekly and daily Stochastic continued to slide lower, indicating the continued loss in weekly and daily momentum, and the continuation of the down cycle. Weekly and daily signals from the indicators indicate the FBM KLCI is in a correction and consolidation state, and the continued loss in momentum will lead the key index to further consolidate.
The short term trend of the FBM KLCI has moved into sideways, and will be range-bound between 1474 and 1532 with a downward bias. Nonetheless, the medium to long term uptrend remained intact.
For the coming week, the market is likely to be quiet as most fund managers would have gone on leave, while some window-dressing activities on index-linked stocks may help to keep the key index afloat. However, rotational play on second and third liners will remain active. The Dow fell -7.34 points or -0.06% lower to close at 11,491.91 last Friday. This week, the FBM KLCI may trade within a range of 1469 to 1539, and for today it is likely to trade within a range of 1490 to 1506.
This week's expected range: 1469 – 1539
Today’s expected range: 1490 – 1506
Resistance: 1502, 1504, 1506
Support: 1490, 1493, 1496
Stocks to watch: OLYMPIA, SCIENTX, KENCANA, MUHIBAH
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