Stocks on Bursa Malaysia closed on a weaker note yesterday, dampened by continued profit-taking in line with most regional markets. Asian stock markets fell after Standard & Poor’s downgraded Spain’s debt rating from BBB+ to BBB- on Wednesday. The FBM KLCI lost 3.93 points or 0.24% to 1,655.47 after hovering in a narrow range of between 1,654.01 and 1,658.04 throughout the day. Losers beat gainers by 362 to 285, while 358 counters were unchanged. Turnover dwindled to 800.27 million shares worth RM1.11 billion from Wednesday's 912.5 million shares worth RM1.41 billion.
Taking cue from the weak performance of Wall street overnight, the FBM KLCI opened with a down gap of 2.2 points at 1,657.20 and slipped lower for the rest of the day to hit the intra-day low of 1,654.01 on continuous selling pressure before rebounding slightly to close off low. Chart-wise, the FBM KLCI formed a small black spinning-top candlestick with a downside break away gap which indicates initial selling down in fear and consolidation with a bearish bias. A downside break away gap which happen at this high level is a bearish sign, and the key index is likely to fall further. Immediate downside support zone is at 1,654 to 1,650, and a break of the key index below the psychological support of 1,650 will likely see it sliding lower to the 1,640-point level.
MACD has hooked downward, and its histogram also further contracted, indicating further loss in the index's momentum. RSI (14) slipped lower to 58.3 from 61.4, indicating the short term relative strength of the key index has turned mildly bullish from bullish. Stochastic was lower at 87.7 from 89.9 and stayed below the slow stochastic line, indicating a continuation of the short term down cycle and further weakening of the key index. Readings from the indicators showed that the FBM KLCI is extending its correction with a further downside risk.
The FBM KLCI has now closed below the 5-day SMA and is just staying above the 10-day SMA which is now at 1,654. A break below the 1,654-point level will likely see the key index slipping lower to the critical support zone of 1,641 to 1,638 provided by the 20 and 30-day SMA, and a break below this critical support zone will see the FBM KLCI turning bearish for the short term. Nevertheless, the longer term trend still remained up at the moment.
Overnight, the Dow fell 18.58 points or -0.14% to close at 13,326.39. Today, the FBM KLCI is likely to trade within a range of 1,649 to 1,662.
This week's expected range: 1604 – 1703
Today’s expected range: 1649 – 1662
Resistance: 1658, 1660, 1662
Support: 1649, 1651, 1653
Stocks to watch: BENALEC, GOCEAN, REDTONE, SCOMIEN, TAKASO, LBS