Stocks on Bursa Malaysia ended the first week of the Golden Rabbit Year on negative note after started the week positively. The FBM KLCI lost 9.47 points or 0.63% to close last Friday at 1,494. 52. On a weekly basis, the FBM KLCI declined 37.3 points to 1,494.52 from 1,531.82. Total weekly volume increased to 12.51 billion shares worth RM13.55 billion from the previous week’s 2.95 billion shares valued at RM3.78 billion recorded during the holiday-shortened week.
The FBM KLCI made a positive start on last Monday after the Chinese New Year holiday, led by gains in plantation-related counters amid strong crude palm oil prices to close 3.78 points higher at 1,535.60 after opening 7.42 points higher at 1,539.24. Total volume surged to 3.24 billion shares. The key index continued to rise on Tuesday, registering a gain of 3.95 points to 1,539.55, after opening 6.74 points higher at 1,542.34, and total volume declined to 3.18 billion shares. However, it retreated into negative territory on Wednesday, losing 3.48 points to 1,536.07 after opening 2.08 points higher at 1,541.63, with losses in blue-chips as sentiment turned cautious amid news of China's latest rate hike. On Thursday, the FBM KLCI lost 30.08 points to 1,503.99 in line with declines in regional Asian markets. The key index continued its decline to close near the lowest point on Friday.
On the weekly chart, the FBM KLCI formed a bearish engulfing candlestick pattern which indicates sellers were dominant throughout the week in pushing the key index lower, and this is in line with the foreign funds sell down on banking and plantation stocks. With the occurrence of this bearish pattern, the FBM KLCI is expected to slide further southward. The next lower target level is expected at 1,474, provided by the 30-week moving average (MA), which coincides with the pivot low formed on November 29, 2010. If the support at 1,474 couldn’t hold, then the key index is likely to visit the psychological support level at 1,450.
On the daily chart, the FBM KLCI had already breached the neckline of the head-and-shoulder (H&S) pattern, which is a longer term top reversal chart pattern. The break of the H&S neckline would give the key index a downside target of 1427, which is also where the 200-day MA is now. On the other hand, in order for the key index to reverse the downtrend, it must at least close above the neckline which is currently at 1512.
Weekly MACD had continued to slide lower, indicating a continuous loss in weekly momentum, and nonetheless, the weekly MACD is still above the zero-line. Daily MACD had also continued to slide lower, and is below its zero-line, indicating a pick up in the bearish momentum. Weekly RSI (14) dropped rapidly to 53 from 63.6 the previous week, and has moved into the neutral zone. Daily RSI (14) is at 32.6, and continued to slide lower into the very bearish zone. Weekly Stochastic had continued to slide lower, and is at 40.8; while the daily Stochastic is at 15.7, and had slid lower into the short term oversold zone. Both weekly and daily indicators’ readings indicate that the FBM KLCI is bearish in the short term and the bearishness may continue for a while. Hence, the FBM KLCI may continue to consolidate this week.
The FBM KLCI is currently closing below its short and medium term moving averages, and hence, the short to medium term trend has turned down. However, the long term uptrend is still intact, but may be challenged soon. From a bigger picture, the FBM KLCI is undergoing a healthy correction, as there was no major correction since the bull-run started in April, 2009. A 23.6% correction on the Fibonacci retracement taking from the pivot low on March 12, 2009 to the pivot high formed on January 16, 2011 would bring the FBM KLCI to 1402 level.
Last Friday, the Dow rose +43.97 points or +0.36% to close at 12,273.26. This week, the FBM KLCI may trade within a range of 1450 to 1530, and for today it is likely to trade within a range of 1470 to 1515.
This week's expected range: 1450 – 1530
Today’s expected range: 1570 – 1515
Resistance: 1500, 1505, 1515
Support: 1470, 1480, 1487
No comments:
Post a Comment