Stocks on Bursa Malaysia closed lower yesterday on continued selling amid a lack of any major catalyst to move up the market. The sell-off came on investor concern over the ongoing Eurozone debt crisis resurfacing amid indications that Spain might require a full bailout. The selling spree remained mild compared with regional markets due to FBM KLCI’s defensive traits and local funds’ support ahead of the IHH Healthcare Bhd listing today. The FBM KLCI, which opened at 1,638.05, slipped 3.6 points or 0.22% to 1,632.57 after hovering between 1,629.18 and 1,639.71 throughout the day. Decliners led advancers by 413 to 294 while 351 counters closed unchanged. Total volume fell to 845.75 million shares valued at RM1.51 billion from 915.89 million shares worth RM1.22 billion on Monday.
The FBM KLCI opened 1.88 points higher at 1,638.05 and moved to the intra-day high of 1,639.71 within the first twenty minutes of trading. Thereafter, the benchmark index plunged on selling pressure to the intra-day low of 1,629.18 at mid morning before rebounding to gradually recover some lost ground. Chart-wise, the FBM KLCI formed a bearish black candlestick which indicates persistent selling pressure with mild buying support. As such, the key index is likely to continue to consolidate until a confirmed reversal signal is observed. Immediate downside support zone is at 1,629 to 1,620, where 1,620 is the 20-day SMA support.
MACD slid lower and has crossed below the signal line, indicating continued weakening of the momentum and issuing a short term sell signal. Nevertheless, as the MACD is still above the zero-line, the current weakness is viewed as just a correction in a bull market. RSI (14) fell lower to 63.4 from 66.1, indicating a continued weakening of the short term relative strength. However, it is still in the bullish zone and reflected the correction. Stochastic was lower at 74.7, indicating a continuation of the short term down cycle and weakening of the index. Readings from the indicators showed that the FBM KLCI is undergoing a short term correction and the longer term outlook still remained bullish.
The FBM KLCI has corrected for the last three trading sessions after a three weeks of continuous record making rally. It is now closing below the immediate short term 5 and 10-day SMA and has rebounded off the 15-day SMA support yesterday. If the key index continues to break the support at 1,629 today, it is likely to slide lower to the 20-day SMA support at 1,620-point. Nonetheless, the medium and long term uptrend still remained intact. Total volume continued to contract, reflecting the consolidation mode. Hopefully, the listing of IHH Healthcare Bhd today will bring some life to the market.
Overnight, the Dow fell -104.14 points or -0.82% to close at 12,617.32. Today, the FBM KLCI is likely to trade within a range of 1,617 to 1,651.
This week's expected range: 1612 – 1668
Today’s expected range: 1617 – 1651
Resistance: 1639, 1645, 1651
Support: 1617, 1623, 1627
Stocks to watch: REDTONE, INGRESS, TGOFFS, PJDEV, IJMLAND