Stocks on Bursa Malaysia ended on an easier note yesterday, as investors remained sidelined, awaiting fresh leads from the ongoing European debt crisis, and the outcome of a meeting of central bankers and economists, including US Federal Reserve chairman Ben Bernanke, at Jackson Hole, Wyoming in the US later this week. The FBM KLCI fell 1.52 points or 0.09% to close at 1,645.58 after opening 0.47 of a point better at 1,647.58. Losers led gainers by 363 to 352, while 368 counters were unchanged. Total turnover increased to 1.26 billion shares worth RM1.296 billion from 1.21 billion shares worth RM1.11 billion registered on Tuesday.
The FBM KLCI opened 0.47 point higher at 1,647.58 and climb higher to the intra-day high of 1,650.52 within the first forty minutes of trading. The key index then slipped on heavy profit-taking to close at the lowest point of the day at 1,645.58. Chart-wise, the FBM KLCI formed a black inverted hammer candlestick, which is a top reversal candlestick pattern when it occurred near the top of a trend, and it indicated heavy profit-taking activity or sellers were dominant at current level, and hence, is likely to slip further. The FBM KLCI was closing at the previous day’s low, and a break below this support level of 1,645 is likely to see the key index plunging lower to the critical support level of 1,640, provided by the 30-day SMA.
MACD continued to slip lower and the histogram expanded further southward, indicating a pickup in the bearish momentum. Nevertheless, as MACD is still above the zero-line, current weakness is viewed as a short term correction. RSI (14) slipped lower to 57.1, indicating the short term relative strength is turning weaker and is lower into the mildly bullish zone. Stochastic also slipped lower to 64.3, indicating a continuation of the short term down cycle. Readings from the indicators showed that the FBM KLCI is currently weak, and there is more downside to come.
The immediate short term trend of the FBM KLCI is down while the medium and long term uptrend is still intact. Immediate overhead resistance zone is at 1,650 to 1,655 while the downside support zone is at 1,643 to 1,640. Immediate downside critical support is at 1,640, provided by the 30-day SMA, and a break below this critical support level is likely to see the FBM KLCI slipping further downward to the 1,630 to 1,620 zone. With the market coming to a close for the month of August today, as tomorrow is National Day holiday, the FBM KLCI is likely to see some window dressing activity to keep it afloat.
Overnight, the Dow rose +4.49 points or +0.03% to close at 13,107.48. Today, the FBM KLCI is likely to trade within a range of 1,638 to 1,655.
This week's expected range: 1635 – 1665
Today’s expected range: 1638 – 1655
Resistance: 1649, 1652, 1655
Support: 1638, 1642, 1643
Stocks to watch: THHEAVY, BOILERM, TAKASO, WCT