Stocks on Bursa Malaysia ended lower yesterday on selling pressure across the heavyweights after recent gains. Mining, small-capitalised and fledgling counters recorded gains, while the palm oil plantation sector, the biggest loser, fell 158.979 points. Regionally, most markets were in the green zone except the KLCI and Singapore’s Straits Times Index which closed lower today, which may imply rotational forces at work. The FBM KLCI, which opened at 1,640.56, fell 8.31 points or 0.51% to 1,631.12 after hitting an intra-day high of 1,641.66. Decliners led advancers by 444 to 317 while 327 counters closed unchanged. Total volume rose to 1.414 billion shares valued at RM2.033 billion compared with Monday’s 1.078 billion shares worth RM1.536 billion.
Taking cue from the overnight gain on Wall Street, the FBM KLCI opened 1.13 points higher at 1,640.56 and climbed to the intra-day high of 1,641.66 within the first hour of trading. Thereafter, the key index slipped lower on selling pressure and hovered within a tight range in the negative zone, but some last minute sell down on the heavyweights caused a plunged in the benchmark index. Chart-wise, the FBM KLCI formed a bearish engulfing candlestick pattern which indicates heavy selling pressure on the index-linked counters. Hence, the FBM KLCI is likely to fall further or continue to consolidate today with an immediate downside support zone at 1,627 to 1,620.
MACD has turned downward, and the histogram also extended southward, indicating a changed in the momentum from a bullish buildup to an increased in the bearish momentum. RSI (14) has hooked downward to 55.2, indicating a drastic change in the short term relative strength from bullish to mildly bullish. Stochastic has hooked downward to 53.1 from 56 previously, reflecting the pullback in the key index, but it is still above the slow stochastic line. Readings from the indicators showed that the FBM KLCI is undergoing a pulled back correction after making a four day continuous gains, and the key index is likely to further consolidate itself.
The bearish move yesterday has caused the FBM KLCI to close below the short term 5, 10 and 20-day SMA, and hence the short term trend is likely to turn bearish with immediate support level at 1,625 provided by the 30-day SMA, follows by the critical pivot low support at 1,620 formed on July 27th. Nevertheless, the medium to long term uptrend is still intact. However, from the viewpoint of Elliott wave, the down move yesterday could spell the beginning of the corrective wave-C, and a break below the critical support level of 1,620-point could see the FBM KLCI falling lower with a downside target of 1,614, follow by 1,607 and 1,597.
Overnight, the Dow rose +51.09 points or +0.39% to close at 13,168.60. Today, the FBM KLCI is likely to trade within a range 1,617 to 1,652.
This week's expected range: 1614 – 1648
Today’s expected range: 1617 – 1652
Resistance: 1638, 1645, 1652
Support: 1617, 1624, 1627
Stocks to watch: PANTECH, HUAYANG, NAIM, ZHULIAN, UOADEV, CENBOND, TAMBUN