FBM KLCI - likely to consolidate
Stocks
on Bursa Malaysia closed lower last Friday on post window-dressing
profit taking amid a quiet trading day as most traders were on holiday.
At close, the benchmark FBMKLCI declined 8.48 points or 0.48% to
1,752.77 after moving between 1,741.45 and 1,757.96 throughout the day.
On a Friday-to-Friday basis, the benchmark index fell 11.67 points or
0.66% from 1,764.44 on previous Friday. Gainers outpaced losers by 394
to 312, while 286 counters were unchanged. Total volume declined to 1.07
billion units worth RM921.65 million from 1.4 billion units worth RM1.6
billion on Wednesday. Weekly turnover increased to 5.31 billion units
worth RM5.48 billion from 4.99 billion units worth RM5.17 billion the
previous week.
The
FBMKLCI was in consolidation mode last week after the previous week’s
strong gains, where it opened last Monday 6.79 points lower at 1,757.65
and slipped lower to hit the intra-day low of 1,753.97, losing 10.47
points at its worst before rebounding to close 3.97 points higher at
1,768.41 on window dressing activities. Taking cue from the mild retreat
on Wall Street overnight, the FBMKLCI declined 1.58 points to 1,766.83
on Tuesday after hitting an intra-week high of 1,770.52. Profit-taking
activity persisted into Wednesday which saw the FBMKLCI declined another
5.58 points to end Year 2014 at 1,761.25 after hovering between
1,755.93 and 1,768.85 throughout the day. The benchmark index continued
its declined on Friday, the first trading day of Year 2015, to close
8.48 points lower at 1,752.77 after hitting an intra-week low of
1,741.45. On the weekly chart, the FBMKLCI formed a black spinning-top candlestick which indicates uncertainty of market direction with a bearish bias. Hence, the FBMKLCI is likely to further consolidate in the coming week. Immediate downside support zone is at 1.741 to 1,722 while the overhead resistance zone is at 1,770 to 1,781. On the daily chart, the FBMKLCI formed a black hammer candlestick, a key bottom reversal candlestick pattern which indicates buying support after plunging in early trade. Hence, the FBMKLCI may continue its rebound from last Friday to move higher or further consolidate today as the candlestick is a black one indicating the rebound on Friday was not very bullish. Immediate downside support zone on the daily chart is at 1,741 to 1,732 while the immediate overhead resistance zone is at 1,757 to 1,770.
Weekly MACD was almost flat while the histogram further contracted upward for a second bar, indicating further reduction of the bearish momentum on the weekly perspective. Daily MACD continued to climb higher but showed sign of tapering, while its histogram contracted downward for a second bar, indicating further reduction in the upward momentum which signifies the key index may goes into consolidation. Weekly RSI (14) hooked downward to 39 from 40.7, indicating a mild pullback correction on the weekly chart and the key index is still in a bearish state. Daily RSI (14) slipped lower to 48.2 from 50.8, indicating a mild pullback correction which pulled the key index into the mildly bearish zone from a neutral state. Weekly Stochastic rose to 38.9 from 26.8, indicating further gain in momentum and continuation of the up cycle. Daily Stochastic, however, slipped lower to 89.6 from 95 and made a dead-cross over the slow stochastic line, indicating an end to the short term up cycle which started on December 18, 2014, and hence, the FBMKLCI is likely to further correct downward. In short, readings from the weekly indicators showed that the bearish momentum on the weekly perspective is gradually reducing but is not turning bullish yet, while readings from the daily indicators showed that the FBMKLCI is losing its upward momentum and is likely to go into consolidation.
The medium to long term trend of the FBMKLCI remained down as bearish as the key index continued to stay below the medium and long term moving averages. On top of that, the FBMKLCI has also stayed below the long term uptrend channel which was drawn from the pivot low of 801.27 on October 28, 2008 to the pivot high of 1896.23 (see the weekly chart), and the key index is still in a downtrend based on the trend channel drawn from the pivot high of 1,896.23 to the pivot low of 1,671. Hence, the FBMKLCI is likely to continue its current downtrend in the near term. In order to reverse the current downtrend, the FBMKLCI must at least close above the upper downtrend channel line which is currently at 1,810-point level, and for the FBMKLCI to turn bullish, it will have to close above the cluster of medium to long term moving averages which post as the strong overhead resistance zone with the highest resistance at 1,841-point currently by the 200-day SMA. For the coming week, the FBMKLCI is likely to stay in consolidation with a downward bias as crude oil price continues to slide southward amid a lack of fresh catalysts in the post-window dressing period.
Last Friday, the Dow rose 9.92 or 0.06% to close the first trading day of Year 2015 at 17,832.99. This week, the FBMKLCI is likely to trade within a range of 1,710 to 1,799, and today, the FBMKLCI is likely to trade within a range of 1,726 to 1,774.
This week's expected range: 1710 – 1799
Today’s expected range: 1726 – 1774
Resistance: 1760, 1767, 1774
Support: 1726, 1734, 1743
Stocks to watch: AEON, AZRB, AAX, BENALEC,
BPLANT, HOMERIZ, INIX, INSTACO, IRIS, JCY, KTB, MEGB, MBMR, MUIPROP,
NIHSIN, PRTASCO, SEM, WPRTS
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