Stocks on Bursa Malaysia closed lower across-the-board yesterday amid weaker buying momentum with sentiment dampened by fear of a global economic slowdown, and the market was expected to remain under pressure unless new measures to bolster the US economic growth really materialised. At the close, the FBM KLCI declined 11.18 points, or 0.68%, to 1,623.91 after hovering between 1,621.31 and 1,638.65 throughout the day. Losers outpaced gainers by 448 to 274 while 369 counters closed unchanged. Total volume decreased to 1.15 billion shares worth RM1.82 billion from Wednesday’s 1.32 billion shares worth RM2.49 billion.
Taking cue from the positive close of the Dow overnight, the FBM KLCI opened 2.36 points higher at 1,637.45 and surged to the intra-day high of 1,638.65 within the first ten minutes of trading, and persistent profit-taking activity that emerged pressed the key index lower for the rest of the day to the intra-day low of 1,621.31 before rebounding slightly to close off low. Chart-wise, the FBM KLCI formed a bearish engulfing candlestick which indicates heavy selling pressure, and the key index is likely to slip lower to the next support zone of 1,619 to 1,615.
MACD and its histogram continued to extend southward, indicating an increased in the bearish momentum. RSI (14) slipped lower to 53.5 from 63.9, indicating the short term relative strength of the FBM KLCI has weakened and is now in the mildly bullish state compared with the bullish state before this. Stochastic continued to slip lower to 51.1, indicating a continuation of the short term down cycle and weakening of the short term market strength. Readings from the indicators showed that the FBM KLCI has gone into a correction mode and is likely to further consolidate itself until positive reversal signs are seen.
The FBM KLCI is currently in a short term downtrend as it has closed below the 5, 10 and 20-day SMA. Nevertheless, as it is still above the critical 30-day SMA, the current weakness is being viewed as a short term correction which does not change the bigger picture, and the medium and longer term uptrend still remained intact. Immediate downside support zone is at 1,621 to 1,615 while the overhead resistance zone is at 1,638 to 1,648. Total market volume remained thin in the region of one billion shares, and the broad market is likely to stay in a consolidation mode with rotational play on the third liners.
Overnight, the Dow rose +211.88 points or +1.67% to close at 12,887.93. Today, the FBM KLCI is likely to trade within a range of 1,599 to 1,656.
This week's expected range: 1612 – 1668
Today’s expected range: 1599 – 1656
Resistance: 1635, 1645, 1656
Support: 1599, 1610, 1617
Stocks to watch: UOADEV, SCOPE, ASUPREM, PANTECH, CMSB