Stocks on Bursa Malaysia ended easier yesterday as key blue-chip counters struggled to find a footing, unlike the uptrend in the regional markets which were lifted on hopes of more monetary stimulus plan in the United States. The FBM KLCI closed 0.64 of a point easier at 1,651.61, after hovering between 1,650.53 and 1,655.24 throughout the day. Losers led gainers by 419 to 305 while 336 counters were unchanged. Turnover decreased to 1.192 billion shares worth RM1.303 billion from Wednesday’s 1.353 billion shares worth RM1.623 billion.
The FBM KLCI opened 0.92 point higher at 1,653.17 and surged higher to hit the intra-day high of 1,655.24 within the first thirty minutes of trading. The key index then slid lower on profit-taking activity which sent it to the intra-day low of 1,650.53 before recovering slightly to close off low. Chart-wise, the FBM KLCI formed a bearish black spinning-top candlestick which indicates indecision of market direction with a downward bias, and this is the fourth spinning-top candlestick that formed at this high level, which showed the market’s reluctance to move higher and strong hurdle at 1,655-point level. The appearance of four black candlesticks consecutively also forewarn of distribution at this level, and hence, the FBM KLCI is likely to further consolidate or correct itself. Immediate downside support is at 1,648, and a break below this critical support level will likely see the benchmark index sliding lower to the next lower support level at 1,638, provided by the 30-day SMA.
MACD slipped lower and is staying just marginally above the signal-line, and a crossover below the signal-line would generate a sell signal which signifies short term correction. RSI (14) hooked downward to 65.4 from 66.3, reflecting the mild losses in the key index, but the short term relative strength is still in the bullish zone. Stochastic was at 85.9 and has turned flat but is still below the slow stochastic line, indicating the short term down cycle is still intact. Readings from the indicators showed that the momentum of the FBM KLCI is turning weak, and hence the key index is likely to further consolidate or correct downward.
The broader trend of the FBM KLCI remained up, but for the immediate short term, it has turned sideways range-bound. The immediate critical support level is at 1,648, in which a break below this level will signify the beginning of a short term downtrend with an immediate downside target of 1,638. The dwindling volume and turnover indicated a lack of interest in the market and is likely to further consolidate ahead of the weekend.
Overnight, the Dow fell -115.30 points or -0.88% to close at 13,057.46. Today, the FBM KLCI is likely to trade within a range of 1,644 to 1,660.
This week's expected range: 1634 – 1665
Today’s expected range: 1644 – 1660
Resistance: 1655, 1658, 1660
Support: 1644, 1647, 1649
Stocks to watch: MPHB, POS, KBB, MYEG, BOLTON