Stocks on Bursa Malaysia ended on an easier note yesterday amid investor concern over the European debt crisis, and investors grew weary of waiting for central banks in China and the US to take action to prop up business activity in the world’s number one and two economies. The FBM KLCI fell 0.09 of a point to close at 1,648.13, after opening 0.7 of a point better at 1,648.92. Losers led gainers by 414 to 344, while 335 counters were unchanged. Total turnover declined to 1.24 billion shares worth RM1.07 billion, from 1.28 billion shares worth RM1.189 billion registered on Friday.
The FBM KLCI opened 0.7 point higher at 1,648.92 but slipped to the intra-day low of 1,647.30 in early morning trade. The key index then rebounded to touch the intra-day high of 1,650.14 and continued to move range-bound for the rest of the day. Chart-wise, the FBM KLCI formed a small black spinning-top candlestick which indicates consolidation amid uncertainty with a downward bias. Hence, the FBM KLCI is likely to extend its correction with an immediate downside target of 1644 follow by 1,639, while overhead resistance zone is at 1,650 to 1,655.
MACD and its histogram continued to slide southward, indicating an increase in the short term downward momentum. RSI (14) was marginally lower at 60.7 from 60.8, reflecting the mild losses in the key index, and the short term relative strength is currently hovering at the borderline of the bullish zone. Stochastic was lower at 77.4, indicating a continuation of the short term down cycle and further loss in market strength. Readings from the indicators showed that the FBM KLCI has entered a short term correction mode and is likely to further consolidate itself.
The short term trend of the FBM KLCI has turned bearish as the key index continued to stay below the short term 5 and 10-day SMA. Nevertheless, the medium and long term uptrend still remained intact. Judging from the low trading volume, the market is likely to remain in a consolidation mode and an increase in short term profit-taking activity is likely to send the FBM KLCI lower to the 1,639-point support level provided by the 20 and 30-day SMA.
Overnight, the Dow lost -33.30 points or -0.25% to close at 13,124.67. Today, the FBM KLCI is likely to trade within a range of 1,644 to 1,653
This week's expected range: 1635 – 1665
Today’s expected range: 1644 – 1653
Resistance: 1649, 1651, 1653
Support: 1644, 1645, 1646
Stocks to watch: BJFOOD, BAHVEST, SEAL, SCOMI, KNM, PRESBHD