Stocks on Bursa Malaysia ended bearish last Friday, weighed down by profit-taking, ahead of Chinese New Year holiday this week, with losses led by plantation counters. The FBM KLCI ended the day 5.07 points or 0.33% lower at 1,521.89 after opening 1.77 points higher at 1,528.73. On a Friday-to-Friday basis, the FBM KLCI erased 25.54 points to 1,521.89. Weekly turnover stood at 7.961 billion shares, worth RM11.443 billion, from previous week's 7.133 billion shares valued at RM9.585 billion.
The local market was basically in correction throughout the week with the FBM KLCI extended its profit-taking correction on Monday due to regional weakness and as investors reduced commitments ahead of the CNY break this week. The key index was down 4.46 points to settle at 1,542.97, off an opening high of 1,550.95. The market suffered a further correction on Tuesday as investors sold off more trading positions amid regional weakness on concern China may tighten credit again. The FBM KLCI tumbled 16.54 points or 1.07 % to close at the day’s low of 1,526.43. On Wednesday, the FBM KLCI opened at 1525.43 and plunged to the intra-day low of 1505.36, losing 21.07 points at its worst, but rebounded to close at 1520.00, still down 6.43 points for the day. The key index rebounded on Thursday as bargain hunters increased their presence, with oil & gas related stocks attracting buyers given positive news on the award of more contracts by PETRONAS. The FBM KLCI bounced back nearly 7 points to settle at 1,526.96. However, the FBM KLCI pulled back on Friday in tandem with regional weakness to close 5.07 points lower at 1,521.89.
On the weekly chart, the FBM KLCI formed a black candlestick with long lower shadow, is a continuation of the previous black candlestick. The key index which closed below the mid range of the week indicates the bear was still stronger, and may continue its effort to push the key index lower. The FBM KLCI rebounded off the 20-week moving average (MA) at 1505 but was closing below its 10-week MA at 1524 may continue with its correction and consolidation this week. The psychological support level at 1500 is critical, if it cannot hold, the key index may slides down to the 1493 and 1474 levels.
On the daily chart, the FBM KLCI formed a bearish engulfing candlestick which covered the body of the candlestick on Thursday. This indicates sellers were dominant, and the key index may continue with its weakness this week. The FBM KLCI is sitting right on the 60-day MA at 1521, and may slide down to re-test the support at 1505.
Weekly MACD had just made a dead cross, this is bearish for the weekly outlook, and the consolidation may prolong. Daily MACD continued to slide lower, indicating a continued weakening of the daily momentum.
Weekly RSI (14) continued to plunge lower to 61.7, while the daily RSI (14) is at 40.6. This indicates the weekly market strength is still bullish, but the daily is already in the bearish zone.
Weekly Stochastic now at 70.3 had continued to slide lower indicating a continuation of the downward momentum and down cycle. The daily Stochastic had rebounded to 24.7 after hitting the low of 14.1, and has just crossed the slow stochastic line, reflecting the rebound. Readings from the weekly and daily indicators show that the FBM KLCI may continue with its correction or consolidation as the sign of weaknesses are still dominant.
The short term trend of the FBM KLCI is currently down. The medium term trend is still up, but is being challenge; while the long term uptrend remained intact. Immediate strong overhead resistance zone is at 1530 to 1550, while the downside support zone is at 1505 to 1474.
As this week is a holiday shortened week with only one and a half trading day, in which Wednesday has only half a day trading, the overall market is expected to remain quiet on limited investor participation. However, the market should bounce back post the Chinese New Year holidays, as bargain hunters return more forcefully, especially if stocks dipped further to more attractive support levels where investors should look to accumulate.
Last Friday, the Dow plunged -166.13 points or -1.39% to close at 11,823.70. This week, the FBM KLCI may trade within a range of 1501 to 1547, and for today it is likely to trade within a range of 1505 to 1541.
This week's expected range: 1501 – 1547
Today’s expected range: 1505 – 1541
Resistance: 1528, 1535, 1541
Support: 1505, 1512, 1516
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