Stocks on Bursa Malaysia closed mixed yesterday in the absence of participation and ahead of the two-day US Federal Reserve monetary policy meeting starting yesterday. Bursa Malaysia was also in line with key regional markets which ended mixed after Wall Street overnight traded between flat and marginally up at close. The FBM KLCI was 2.95 points or 0.18% higher at 1,664.9 after opening 1.15 points lower at 1,660.8. The benchmark index hovered between 1,658.03 and 1,666.26 throughout the trading session. Losers led gainers by 372 to 298, with 350 counters unchanged. Volume decreased to 1.01 billion shares valued at RM1.36 billion from 1.28 billion shares worth RM1.46 billion on Monday.
The FBM KLCI opened 1.15 points lower at 1,660.80 and slipped to the intra-day low of 1,658.03 within the first ten minutes of trading. The key index then rebounded and moved gradually higher in a narrow range to hit the intra-day high of 1,666.26 at late afternoon before closing off high on last minute profit-taking. Chart-wise, the FBM KLCI formed a bullish white piercing-line candlestick pattern, a bottom reversal candlestick pattern which indicates the bulls were fighting back after being beaten down earlier, and the key index is likely to move higher on follow through momentum.
MACD was almost flat but its histogram contracted further, indicating a reduction in the momentum. Nevertheless, as the MACD is still above its signal-line, the current weakness is viewed as just a pullback correction. RSI (14) hooked up to 61.8 from 59.9, reflecting the rebound in the key index and the short term relative strength is back to the bullish zone. Stochastic was lower at 78.5 from 84.2, and has crossed below the slow stochastic line, issuing a sell signal and indicated the possible beginning of a short term down cycle. Readings from the MACD and stochastic showed that weakness is surfacing, and the FBM KLCI is likely to continue its consolidation.
The trend of the FBM KLCI still remained up as the key index rebounded to close above the immediate short term 5 and 10-day SMA after piercing through them. However, as the FBM KLCI is almost at the record high level, it either continues to climb higher to chart new high or correct downward, and it looks like the probability of the latter happening is higher. Immediate strong overhead resistance zone is at 1,668 to 1,670 while the downside support zone is at 1,658 to 1,649.
Overnight, the Dow fell 243.36 points or -1.82% to close at 13,102.53. Today, the FBM KLCI is likely to trade within a range of 1,651 to 1,674.
This week's expected range: 1632 – 1691
Today’s expected range: 1651 – 1674
Resistance: 1668, 1671, 1674
Support: 1651, 1654, 1659
Stocks to watch: UEMLAND, IHH, DUTALND, EVERGRN, SCOPE, TAS