Stocks on Bursa Malaysia ended mixed yesterday on lack of catalyst with last-minute selling pushing the benchmark index into the negative territory. The FBM KLCI was almost flat, edging down 0.92 of a point to 1,653.52, after moving within a narrow range of between 1,658.5 and 1,652.08. Gainers outnumbered losers by 337 to 334 while 352 counters were unchanged. Turnover decreased to 975.099 million shares, valued at RM1.26 billion, from 1.002 billion shares, valued at RM981.601 million, recorded on Monday.
Taking cue from the strong performance of the Dow overnight, the FBM KLCI opened 1.67 points higher at 1,656.11 and moved higher to touch the intra-day high of 1,658.50 at late morning. The key index then fell on heavy profit-taking which pushed it down for the rest of the day to hit the intra-day low of 1,652.08 before rebounding slightly to close off low. Chart-wise, the FBM KLCI formed a bearish dark-cloud-cover candlestick pattern which indicates profit-taking after an up move at early part of the day. Hence, the FBM KLCI is likely to continue to consolidate with immediate downside support at 1,649-point level while the overhead resistance is at 1,658.
MACD and its histogram continued to slide lower, indicating a further loss in momentum. Nonetheless, as the MACD is still above the signal-line, the current weakness may just be a correction after the recent strong rally. RSI (14) was marginally lower at 56.5 from 57.3, reflecting the mild pullback in the key index, and the short term relative strength is still mildly bullish. Stochastic continued to slip lower to 74.1 from 78.4, 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 still trapped in a correction mode and the consolidation is likely to extend.
The immediate short term trend of the FBM KLCI is down, as the key index continued to close below the 5 and 10-day SMA. Nevertheless, the medium and longer term trend still remained up. In order to reverse the downtrend the FBM KLCI will have to break above the immediate overhead resistance at 1,658. However, if the key index were to break below the immediate downside support at 1,649 it is likely to slip lower to the 20 and 30-day SMA support zone at 1,643 to 1,639. As the benchmark index continues to consolidate, the trading activity was dominated by rotational play of the second and third liners as can be seen from the average price per unit traded, and the rotational play is likely to continue.
Overnight, the Dow rose 127.55 points or +0.95% to close at 13,551.78. Today, the FBM KLCI is likely to trade within a range of 1,644 to 1,665.
This week's expected range: 1633 – 1679
Today’s expected range: 1644 – 1665
Resistance: 1658, 1661, 1665
Support: 1644, 1648, 1650
Stocks to watch: PERDANA, INCKEN, REDTONE, ANNJOO