Stocks on Bursa Malaysia closed lower last Friday, in line with the weaker sentiment on regional markets prompted by the plunge in commodities prices and weak US economic outlook. The FBM KLCI ended the day 5.68 points lower at 1,515.50, and on a weekly basis, the key index decreased by 19.45 points from 1,534.95 the previous Friday. Losers led gainers by 448 to 257, while 308 counters were unchanged. Turnover declined to 855.55 million shares, worth RM1.42 billion, from Thursday’s 859.20 million shares, worth RM1.27 billion. Weekly volume decreased to 3.924 billion shares worth RM5.45 billion from 5.007 billion shares worth RM4.901 billion last week.
The FBM KLCI started last week on Tuesday on a weak note with the key index continued the downward move from the previous Friday to close 3.48 points at 1,531.47. Bursa Malaysia was closed on last Monday for the Labor Day holiday. The FBM KLCI lost another 3.04 points to close at 1,528.43 on Wednesday as investors tracked weaknesses in regional markets. In cautious trade, the FBM KLCI dropped 7.25 points to 1,521.18 on Thursday and an extra 5.68 points to 1,515.50 on follow-through selling on Friday after touching the intra-week low of 1,507.64.
On the weekly chart, the FBM KLCI formed a bearish engulfing candlestick pattern which indicates heavy selling pressure for last week and brought the key index back to its current consolidation range. The FBM KLCI is currently resting on the 30-week moving average (MA) after penetrating it briefly on Friday. With the bearish move last week, the FBM KLCI is likely to continue with its downward move this week to test the 1,500-point psychological support level.
On the daily chart, the FBM KLCI formed a hammer candlestick with a down gap, which indicates heavy selling pressure initially but bargain-hunting activities managed to lift the key index off its intra-day low to close at the current critical support level of 1,515. The hammer candlestick is a bottom reversal pattern, and hence the key index may stage a rebound today. However, the resistance zone at 1,519 to 1,521, which formed by the 60 and 120-day MAs may post as a strong barrier to any up move. The key index will have to close above this resistance zone in order to maintain its current state of consolidation, otherwise, the chances of sliding lower is high.
Weekly MACD continued to slide lower, indicating a continued loss of momentum on the weekly perspective. Daily MACD, has however, crossed below its zero-line, giving out a sell signal.
Weekly RSI (14) slid lower to 52.1, indicating the key index is losing its weekly market and is at the neutral zone now. Daily RSI (14) has, however, slid lower to 41.3, indicating the FBM KLCI is getting more bearish.
Weekly Stochastic is slightly lower at 52.9, and is below the slow stochastic line. Daily stochastic, has slid lower to 32.8, indicating the continued loss in market strength. Readings from the indicators showed that the FBM KLCI is currently weak and has turned bearish for the short term, and hence is likely to extend its correction and consolidation in the near term.
The FBM KLCI has now closed below all its short, medium and long term moving averages; hence, the key index is bearish looking. However, it is still above the critical long term 200-day MA, which is now at 1,483 level. Immediate overhead resistance zone is at 1,519 to 1,541, while the downside support zone is at 1,515 to 1,500.
With the dwindling volume and uncertain economic outlook externally, the FBM KLCI is likely to track the performance of regional market for the coming week. Last Friday, the Dow rose +54.57 points or +0.43% to close at 12,638.74. This week, the FBM KLCI is likely to be range-bound with a downward bias with a range of 1,472 to 1,551, and for today it is likely to trade within a range of 1,497 to 1,531.
This week's expected range: 1472 – 1551
Today’s expected range: 1497 – 1531
Resistance: 1521, 1526, 1531
Support: 1497, 1502, 1509
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