Stocks on Bursa Malaysia ended mixed last Friday with finance and plantation stocks leading the decliners, as the market remained concerned about the unrest in Middle East despite the release of upbeat earnings on Thursday. The FBM KLCI which made a solid move upwards earlier in the morning retreated to close 0.6 point or 0.04% lower at 1,489.27. Week-on-week, the key index declined by 28.29 points from 1,517.56 the previous week. Advancers led decliners by 524 to 300 while 256 counters were unchanged. Volume decreased to 1.38 billion shares worth RM1.79 billion from Thursday's 2.003 billion shares worth RM2.62 billion. The total weekly volume increased to 8.584 billion shares worth RM10.397 billion from 7.092 billion shares worth RM7.638 billion the previous week.
The FBM KLCI went through a volatile week last week, touching the intra-week high of 1,527.09 on Monday, but retreated strongly on heavy selling pressure for most of the week to close the week at the intra-week low of 1,489.27. On the weekly chart, the FBM KLCI formed a bearish engulfing candlestick pattern which reflects the heavy selling pressure experienced by the benchmark index last week. With this bearish formation, the FBM KLCI is likely to further consolidate or correct downward. Immediate support provided by the 30-week moving average (MA) is at 1,484.
On the daily chart, the FBM KLCI formed an inverted hammer-like black candlestick; however, as the upper shadow is relative short compared to its body, it shows that the index was still experiencing selling pressure on last Friday. The key index has now closed below the long term 120-day MA, and this indicates that the key index has started to turn bearish on the longer term perspective. In the near term, the key index will need to reverse to stay above the 1,500 level in order for it to remain its long term uptrend; otherwise, it may continue to slide lower.
Weekly MACD continued to slide lower, indicating a continuous loss in weekly momentum. Daily MACD also slide lower into the negative zone, indicating a pick up in the downward momentum. Weekly RSI (14) is at 51.1and has continued to plunge lower towards the neutral zone. Daily RSI (14) is at 35.5, and remained in the bearish zone. Weekly Stochastic had continued to plunge lower to 25.6, while daily Stochastic is at 12.6 and has fell into the short term oversold zone. Readings from the indicators, both weekly and daily, indicates that the FBM KLCI is very weak at the moment, and this weakness may continue in the near term until some solid reversal comes in.
With the FBM KLCI closing below the 120-day MA, the key index has technically turned bearish for the long term. Together with the occurrence of two lower highs and three lower lows, the trend is currently down. In order to reverse this downtrend, the FBM KLCI will need to close above the pivot high of 1,527 in the near term. Immediate overhead resistance zone is at 1,500 to 1,527, while the immediate downside support zone is at 1,484 to 1,474. The 1,474 support level is especially critical, if this level is breached, then the key index might slide lower to the 1,450 and 1,430 levels, fulfilling the target of the head-and-shoulder chart pattern.
Last Friday, the Dow rose +61.95 points or +0.51% to close at 12,130.45. This week, the FBM KLCI is expected to continue with its consolidation, and may trade within a range of 1,438 to 1,540, and for today it is likely to trade within a range of 1475 to 1510.
This week's expected range: 1438 – 1540
Today’s expected range: 1475 – 1510
Resistance: 1496, 1503, 1510
Support: 1475, 1482, 1485
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