Stocks on Bursa Malaysia closed mixed yesterday in line with poor performances in the regional markets spooked by recent reports of weak economic outlook for major economies. The benchmark FBM KLCI, however, was up 0.96 of a point to 1,646.32 after hitting a new all-time intra-day high of 1,650.42. Decliners outnumbered gainers by 421 to 321 while 349 counters closed unchanged. Turnover decreased to 982.567 million shares worth RM1.226 billion from 1.229 billion shares worth RM1.544 billion last Friday.
Continuing the upward thrust from last Friday, the FBM KLCI opened with an up gap of 1.94 points higher at 1,647.30 and continued to move higher, it recorded a new all-time intra-day high of 1,650.42 at 9.55 a.m. but could not sustained the rise, and the benchmark index slipped lower on active profit-taking activity for the rest of the day to hit the intra-day low of 1,646.19 before rebounding slightly to close off low. Chart-wise, the FBM KLCI formed a typical bearish black inverted hammer candlestick which is commonly known as shooting-star, and this is a classical top reversal candlestick pattern which indicates heavy profit-taking after hitting a new high and it spells a top for the FBM KLCI at the moment. Moreover, the FBM KLCI also made a pullback to close below the previous all-time high level of 1,647.94 after breaking it, which issued a second peaking signal for the benchmark index. Hence, the FBM KLCI is likely to correct itself.
MACD continued to rise but is still below the signal line and its histogram further contract upward but is still below the zero-line, indicating a weak increased in the upward momentum. RSI (14) rose marginally to 65.5 from 64.9, indicating a slight improvement in the short term relative strength, and is still in the bullish zone. Stochastic continued its rise to 93.6, moving deep into the short term overbought zone, and a pullback is likely to happen. Readings from the indicators showed that the FBM KLCI is in a bullish state but could be overbought as indicated by the stochastic value, and a correction may take place.
The FBM KLCI is currently on a bullish uptrend as it is above all the short, medium and long term moving averages. However, it might have seen its temporary top as indicated by the bearish top reversal shooting-star candlestick formation, and a pullback correction is likely to take place. Nevertheless, as long as the key index do not close below the 30-day SMA which is currently at 1,631, the correction is considered healthy and necessary to neutralized the short term overbought situation. Total volume shrinks to below one billion shares, indicating a lack of interest in the market, and hence the market may goes into a consolidation phase.
Overnight, the Dow fell -38.52 points or -0.29% to close at 13,169.43. Today, the FBM KLCI is likely to trade within a range of 1,640 to 1,655.
This week's expected range: 1621 – 1660
Today’s expected range: 1640 – 1655
Resistance: 1649, 1652, 1655
Support: 1640, 1643, 1644
Stocks to watch: MYEG, PANTECH, HIBISCS, PERISAI