FBMKLCI - likely to extend rebound
Stocks
on Bursa Malaysia finished higher last Friday on continuous buying
support in selected blue- chips throughout the day. The benchmark
FBMKLCI rose 16.04 points or 0.94% to close at 1,715.99, after opening
6.52 points higher at 1,706.47. However, on a weekly basis, the
benchmark index fell 17 points or 0.98% from previous week’s 1,732.99.
Gainers trounced losers by 606 to 257, while 277 counters were
unchanged. Total volume fell to 1.87 billion units worth RM2.2 billion
from 1.9 billion units worth RM1.9 billion on Thursday. Weekly turnover
increased to 9.42 billion shares worth RM10.63 billion from 6.58 billion
shares worth RM8.12 billion last week.
Following
a big slump on Wall Street the previous Friday, the FBMKLI opened last
Monday 17.12 points lower at 1,715.87 and plunged lower on continuous
selling pressure to end the day 35.68 points, or 2.06%, lower at
1,697.31. Market breadth was extremely negative as losers trounced
gainers by 1,010 to 66. Tuesday saw the FBMKLCI losing another 23.37
points or -1.38% to 1,673.94 on continued selling pressure, sparked by
the continuous fall in oil prices, reduced demand and slower global
growth. The FBMKLCI staged a technical rebound on Wednesday to close
7.96 points or 0.48% higher at 1,681.9, after hitting the intra-week low
of 1,671.82. The key index continued its rebound on Thursday to close
18.05 points or 1.07% higher at 1,699.95 on renewed buying interests by
local investors, and the buying momentum extended into Friday with
another gain of 16.04 points or 0.94% to close the week at 1,715.99,
after hitting an intra-week high of 1,720.78.On the weekly chart, the FBMKLCI formed a bullish white hammer candlestick, a key bottom reversal candlestick pattern which indicates an initial sell down by the bears but the bulls fight back later to lift the index to close above the opening price. Hence, the FBMKLCI is likely to see further rebound in the coming week with immediate overhead resistance zone at 1,721 to 1,730, the gap area formed last week. On the daily chart, the FBMKLCI formed a bullish white candlestick with an upside runaway gap, and together with the earlier two white candlesticks, it formed a bullish three-white-soldiers pattern which indicates a change in investors sentiment from bearish to bullish and may signify a reversal of the current downtrend. Hence, the FBMLCI is likely to climb higher today on follow through buying momentum.
Weekly MACD and its histogram continued to slide lower, indicating an increased in the weekly bearish momentum. Daily MACD, however, hooked upward but is still below the signal-line and zero-line, and its histogram also contracted upward, indicating an initial change in momentum and a technical rebound. Weekly RSI (14) slipped lower to 28.6 from 30.6, indicating a very bearish state of the key index on the weekly perspective and is oversold, and hence, a rebound might be expected. Daily RSI (14) rose to 38.7 from 33.4, indicating the short term relative strength of the key index has improved to the bullish side even though it is still in the bearish zone. Weekly Stochastic was lower at 11.8 from 16.6, indicating continued weakness on the weekly perspective but the key index was oversold. Daily Stochastic, however, continued to rise to 19.5 from 8, indicating a continuation of the short term up cycle after the reversal. In short, readings from the weekly momentum indicators showed a still bearish picture of the FBMKLCI, but the oversold readings on the weekly RSI and stochastic indicators point to a possible technical rebound. On the flip side, readings from the daily momentum indicators showed that the FBMKLCI was staging a technical rebound on the daily perspective after hitting the oversold zone. Hence, the FBMKLCI is likely to stage further rebound on follow through buying momentum.
The general trend of the FBMKLCI is still down and bearish as the key index continued to stay below most of the short, medium and long term moving averages. Nonetheless, the rebound last week saw the FBMKLCI closing above the immediate near term 5-day simple moving average (SMA), indicating an initial changed in the near term trend from down to up. However, as the FBMKLCI is still losing below the 10, 15 and 20-day SMA which are respectively at 1,719, 1,733 and 1,758-point level, the key index must at least close above these short term moving averages to prove a short term trend change from down to up. Hence, the FBMKLCI is still fragile at the moment as the bullish upward move last week may turn out to be just a technical rebound, which is short-live, in an oversold market. Immediate overhead resistance levels are at 1,721, 1,730 and 1,748, while the downside support levels are pegged at 1,700, 1,688 follow by the pivot low of 1,671. For the coming week, the FBMKLCI is likely to see an initial follow through uptrend but likely to taper off mid-week as Thursday is the Christmas holiday.
Last Friday, the Dow rose 26.65 or 0.15% to close at 17,804.80. This week, the FBMKLCI is likely to trade within a range of 1,653 to 1,751, and today, the FBMKLCI is likely to trade within a range of 1,693 to 1,735.
This week's expected range: 1653 – 1751
Today’s expected range: 1693 – 1735
Resistance: 1722, 17528, 1735
Support: 1693, 1700, 1708
Stocks to watch: AZRB, CMSB, CONNECT,
DIALOG, E&O, ECOWLD, EFFICEN, EG, FABER, HSPLANT, IDEAL, IFCAMSC,
K1, MATRIX, MQTECH, PRTASCO, TNLOGIS, TMCLIFE, UCHITEC, VITROX
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