Stocks on Bursa Malaysia ended lower last Friday in line with its regional peers, underpinned by concerns over faltering growth and inflation. Continued selling prompted by weak external economic indicators stoked investors' worries over a possible economic slowdown. On the local front, the outcome of the Sarawak state election had kept investors at bay. The FBM KLCI ended the week at 1,521.94, down 3.86 points or 0.25%, after opening 3.79 points higher at 1,529.59. Week-on-week, it dropped 35.55 points or 2.3% from 1,557.49 the previous Friday. Losers led gainers by 452 to 285 while 316 counters were unchanged. Daily turnover declined to 915.038 million shares, valued at RM1.565 billion, from 965.837 million shares, worth RM1.532 billion, registered on Thursday. Weekly volume fell to 5.613 billion shares valued at RM8.476 billion from 8.110 billion shares, worth RM10.675 billion the previous week.
The FBM KLCI was basically in correction mode the whole of last week. It opened 2.18 points higher at the day’s high of 1,559.67 on last Monday and this level turned out to be week’s high as well and the key index was subjected to continuous selling pressure throughout the day to end 13.49 points lower at1,544.00. Selling pressure on blue-chip stocks continued on Tuesday, and the FBM KLCI lost another 18.08 points to 1,525.92. The key index rebounded on Wednesday on bargain-hunting, recouping 9.67 points to close at 1,535.59. On Thursday, the FBM KLCI ended lower on bearish sentiments due to regional discounts to finish 9.79 points at 1,525.80, and on Friday, the key index continued to slide lower ahead of the Sarawak state election to close at 1,521.94 after hitting the intra-week low of 1,517.68.
On the weekly chart, the FBM KLCI formed a bearish long black candlestick which confirmed the reversal signal issued by the black hangman candlestick formed the previous week. With this price action, the FBM KLCI pulled back to its weekly support zone of 1,517 to 1,511 provided by the 10 and 30-week moving averages (MA). The support level at 1,511 is particularly important, as a break below this level will likely see the key index sliding further downward to the 1,500 to 1,474 zone.
On the daily chart, the FBM KLCI formed another bearish black candlestick which indicates continuous selling pressure experienced by the key index. The FBM KLCI, however, again rebounded off the 120-day MA when it hit the intra-day low of 1,517.68, and this credence to the support provided by the 120-day MA. If this support level is broken in the coming week, the key index will likely to move further southward to test the support zone at 1,510 to 1,500.
Weekly MACD had again hooked downward after rising for two weeks, indicating a weakening of the weekly momentum. Daily MACD continued to slide lower, indicating a continuous loss of daily momentum; nevertheless, the MACD line is still above the zero line, which indicates the key index is experiencing a short term correction.
Weekly RSI (14) fell to 54 from 62.1 the previous week, indicating the weekly market strength has turned neutral. Daily RSI (14) has continued to slide lower to 45.9, indicating the key index has turned bearish for the short term.
Weekly Stochastic continued to move higher, but is tapering off, indicating a slow down in the upward strength, which may forewarn of a possible reversal of the up cycle. Daily Stochastic, however, has continued to move lower to 28.8, indicating a continuation of the daily down cycle and weakening of the market strength. Readings from both the weekly and daily indicators showed that the FBM KLCI is currently undergoing a consolidation process with a downward bias.
The short term trend of the FBM KLCI is currently down as the key index is closing below the 5, 10 and 20-day MAs. The medium term trend remained sideways as indicated by the 60-day MA which is flat, while the long term trend remained up. Immediate overhead resistance zone is at 1,530 to 1,541, while the immediate support zone is at 1,517 to 1,510.
Last Friday, the Dow rose +56.68 points or +0.46% to close at 12,341.83. This week, the FBM KLCI is likely to be range-bound within a range of 1,464 to 1,576, and for today it is likely to trade within a range of 1,501 to 1,547.
This week's expected range: 1464 – 1576
Today’s expected range: 1501 – 1547
Resistance: 1531, 1539, 1547
Support: 1501, 1509, 1515
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