Stocks on Bursa Malaysia closed lower yesterday, in line with the weakness in regional bourses. Market breath was bearish as investors lost hope for more stimulus measures expected from policy makers in major economies to spur weak global economic growth. Bank Negara governor Zeti Akhtar Aziz announced that the Malaysian economy recorded a higher-than-expected second quarter growth of 5.4%. However, the benchmark FBM KLCI, finished 0.88 of a point higher at a new-all-time high of 1,653.78, driven by gains in selected heavyweights. Decliners outnumbered advancers by 410 to 335 while 343 counters were unchanged. Turnover increased to 1.113 billion shares, worth RM1.185 billion, from 1.014 billion shares, worth RM1.255 billion, registered on Tuesday.
The FBM KLCI opened 1.56 points lower at 1,651.34 and slipped lower on heavy profit-taking to the intra-day low of 1,646.76 at late morning. The key index then moved in a sideways range in the negative zone for a major part of the day, and a last minute buying of selected blue-chips pushed the benchmark index to close at another new all-time-high level. Chart-wise, the FBM KLCI formed a white hanging-man candlestick, which is a potential top reversal candlestick pattern, and the benchmark index may correct or consolidate itself as it showed a divergence to the broad market to move higher on just a last minute effort while the broad market was in a profit-taking correction mode, and this showed the power of the hidden hands in its intention to push the benchmark index higher.
MACD and its histogram continued to climb higher, indicating a continued gain in the upward momentum. RSI (14) was marginally higher at 69.7 from 69.3, and is tapering off, indicating a slow down in the upward relative strength, but is still at a bullish state. Stochastic was also marginally higher at 95.7 from 95.3, and is also tapering off, indicating a waning of the market strength, and is in the short term overbought zone. Readings from the indicators showed that the FBM KLCI is in a bullish state but its upward momentum has slowed down, and hence the key index might goes into a consolidation.
The FBM KLCI is on a bullish uptrend and at its best now, as it is the only market barometer in the world which is standing at a record high at the moment. Hence, one got to be on the guard as this could turn out to be the historical peak for the benchmark index in time to come. Nevertheless, our immediate upside target of 1,655 and 1,665 remained unchanged, while the immediate downside support zone is at 1,646 to 1,640.
Overnight, the Dow fell a marginal -7.36 points or -0.06% to close at 13,164.78. Today, the FBM KLCI is likely to trade within a range of 1,642 to 1,661.
This week's expected range: 1621 – 1660
Today’s expected range: 1642 – 1661
Resistance: 1656, 1659, 1661
Support: 1642, 1644, 1649
Stocks to watch: SUCCESS, ASAS, GASMSIA, KEURO, ASUPREM, BOILERM