INDEXFTSE:FBMKLCI : FBM KLCI - likely to consolidate downward
Stocks
on Bursa Malaysia closed lower last Friday dampened by selling in
blue-chips and heavyweights, led by CIMB. The benchmark FBMKLCI managed
to stay above 1,800 points despite the market being traded lower for the
whole day on profit-taking ahead of the weekend. At close, the FBMKLCI
declined 13.16 points or 0.72% to end at 1,809.13, after hovering
between 1,817.56 and 1,808.13 throughout the day. Week-on-week, the key
index fell 4.66 points or 0.26% from previous Friday’s 1,813.79. Losers
outpaced gainers by 464 to 295 with 309 counters unchanged. Total volume
decreased to 1.77 billion units worth RM1.66 billion from Thursday’s
1.64 billion units worth RM1.62 billion. Weekly turnover narrowed to
868.22 million shares worth RM8.30 billion from previous week’s 9.95
billion shares worth RM8.98 billion.
The
FBMKLCI opened last Monday 0.26 of a point lower at 1,813.53 and moved
in sideways in a tight range before settling 7.31 points lower at its
intra-day low of 1,806.48, in line with weak market sentiment in other
Asian markets. Tuesday saw the FBMKLCI rebounding 11.9 points to close
at the intra-day high 1,818.38, spurred by bargain hunting mostly in
selected blue-chips and heavyweights. The key index continued its
rebound from Tuesday to close another 6.01 points higher at 1,824.39
points on Wednesday after hitting an intra-week high of 1,827.40, moving
in line with most of its South-East Asian peers. The FBMKLCI declined
2.1 points to close at 1,822.29 on Thursday in line with regional
markets following a weak economic data released in China, as most Asian
stocks fell after the manufacturing purchasing managers’ index showed
factory output in the world’s second-biggest economy contracted for the
first time in 6 months. Profit-taking activity continued into Friday
which saw the key index losing another 13.16 points to end the week at
1,809.13. On the weekly chart, the FBMKLCI formed a black inverted hammer candlestick, a bottom reversal candlestick pattern which indicates an initial fight back by the bulls but the bears took over later. Hence, the FBMKLCI is likely to further consolidate with a downward bias in the coming week. On the daily chart, the FBMKLCI formed a bearish black candlestick which gap down from Thursday’s candlestick, indicating the market was being sold down on fear to end near the low of the day. Hence, the bearish momentum is likely to continue to drag the key index lower to test the immediate support zone of 1, 805 to 1,800 today, and a break of the 1,800-point psychological support level will trigger heavier selling pressure which will drag the key index lower.
Weekly MACD continued to slide lower below the zero-line and the weekly signal-line, however, its histogram was only marginally lower, indicating a state of consolidation on the weekly perspective. Daily MACD hooked downward and its histogram also extended southward, indicating a resumption of the bearish momentum after a two-day technical rebound, and hence, the FBMKLCI is likely to further consolidate. Weekly RSI (14) was lower at 41.9 from 42.8, indicating a mild decline in the mildly bearish zone. Daily RSI (14), however, fell drastically to 41.9 from 48.5, indicating heavy selling pressure on the daily perspective. Weekly Stochastic fell to 43.7 from 56, and has made a dead-cross over the slow stochastic line, issuing a sell signal, and indicating further downward pressure ahead. Daily Stochastic hooked downward to 26.1 from 30.9, indicating an end to the recent technical rebound on last Tuesday and Wednesday, and a resumption of the downward move. In short, readings from both weekly and daily indicators showed that the FBMKLCI is in a weak and mildly bearish state, and is likely to continue to consolidate.
The technical picture of the FBMKLCI still remained weak and bearish as the key index continue to stay below the short, medium and long term moving averages. For the coming week, the FBMKLCI is likely to further consolidate downward to test the immediate downside support zone of 1,805 to 1,800 as there is no fresh impetus to move the market as most investors would adopt a wait-and-see attitude before the conventional December window-dressing activity kick in. A break of the 1,800-point psychological support level will see the FBMKLCI plunging lower to test the 1,795 to 1,788 support zone, where 1,788-point is the 76.4% Fibonacci retracement support level for the range measuring from 1,766 to 1,858. A stronger support is expected at the 1,778-point level, the 50% Fibonacci retracement support level for the range measuring from the pivot low of 1,660 to the all-time high level of 1,896.23. Nonetheless, the much longer term trend of the FBMKLCI is still up, and hence, current weakness actually presents an opportunity for the long term investors to accumulate quality shares on weakness for longer term gains.
Last Friday, the Dow rose 91.06 points or 0.51% to close at a fresh record high of 17,810.06. This week, the FBMKLCI is likely to trade within a range of 1,778 to 1,849, and today, the FBMKLCI is likely to trade within a range of 1,796 to 1,826.
This week's expected range: 1778 – 1849
Today’s expected range: 1796 – 1826
Resistance: 1815, 1821, 1826
Support: 1796, 1802, 1805
Stocks to watch: DPS, ECONBHD, ELSOFT, ESCERAM, FRONTKN, GENETEC, NOVAMSC, SOLUTN, SCOMNET, VS, VSOLAR
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