Stocks on Bursa Malaysia ended yesterday on an easier note on profit-taking activities after the recent market rally, moving in line with the weaker regional sentiment as Asian bourses were affected by the weak China purchasing managers’ index (PMI) number released yesterday. The FBM KLCI ended 20.52 points or 1.25% lower at 1,625.59 after hovering between 1,620.68 and 1,640.29. Losers led gainers by more than double at 551 to 184 while 312 counters were unchanged. Total turnover was lower at 899.29 million shares worth RM1.46 billion from Wednesday's 1.03 billion shares valued at RM1.74 billion.
The FBM KLCI opened with a down gap of 6.43 points at 1,639.68 and slipped lower throughout the day to hit the intra-day low of 1,620.68, losing 25.43 points at its worst, before rebounding in the last minute to close off low. Chart-wise, the FBM KLCI formed a bearish long black candlestick which indicates heavy profit-taking or sell down on blue-chip stocks after the recent rally, and the key index has closed the gap formed last Friday. With this heavy down move the FBM KLCI is likely to further consolidate itself with immediate downside support at 1,620-point level.
MACD has hooked downward to make a dead-cross over the signal-line after making a golden-cross the day before, signifying the bear is again in control and the change in momentum direction from up to down again. As this dead-cross happened below the zero-line, it signifies the continuation of the bear trend. RSI (14) fell to 44.6 from 56.6, indicating a drastic change in the FBM KLCI's relative strength from a mildly bullish state to a mildly bearish state. Stochastic has also hooked downward to 66.5 from 77.2, indicating a drastic change in the market cycle from up to down. Readings from the indicators showed that the FBM KLCI has turned bearish and is likely to fall further.
The heavy down move yesterday has spelled an end to the recent rally which is a technical rebound rally, and the FBM KLCI has again fallen below the short and medium term moving averages which indicates the short and medium term trend has turned bearish, and there will be more downside to come. Immediate support is at the 1,620-point level, and a further break of the 1,620-point support level will likely see the key index plunging lower to re-test the critical support of 1,611, which is the lower supporting trend line of the uptrend channel, and of course the crucial support lies at the 1,600 psychological level.
Overnight, the Dow rose 18.97 points or +0.14% to close at 13,596.93. Today, the FBM KLCI is likely to trade within a range of 1,597 to 1,660
This week's expected range: 1573 – 1685
Today’s expected range: 1597 – 1660
Resistance: 1637, 1649, 1660
Support: 1597, 1609, 1617