Stocks on Bursa Malaysia closed slightly lower yesterday for the third consecutive day due to profit-taking and less buying interest from local players as a lack of follow-through support weighed on the day’s market as investors remained on the sidelines ahead of the two-day holidays next week – Deepavali and Maal Hijrah. The FBM KLCI was 0.10 of a point lower at 1,645.53 after hovering between 1,643.29 and 1,649.94 throughout the trading session. Losers led gainers by 367 to 310, while 351 counters were unchanged. Volume fell to 1.207 billion shares worth RM1.709 billion from Tuesday's 1.267 billion shares worth RM1.66 billion.
The FBM KLCI opened 3.73 points higher at 1,649.36 and surged to the intra-day high of 1,649.94 within the first five minutes of trading, and the key index moved in a narrow sideways band for the rest of the morning session. The afternoon session saw selling pressure coming in which sent the key index to the intra-day low of 1,643.29 before rebounding on last minute buying support. Chart-wise, the FBM KLCI formed a small black spinning-top candlestick which indicates consolidation, and the key index is likely to further consolidate with a bearish bias. Immediate downside support zone is at 1,643 to 1,638, while the immediate overhead resistance is at 1,650.
MACD and its histogram continued to slide southward, indicating a continued loss in the index's momentum. RSI (14) was flat at 40.5, reflecting the marginal loss and the short term relative strength remained in a bearish state. Stochastic was lower at 16.7 from 18.1, indicating a continuation in the short term down cycle and a weak market strength. Readings from the indicators showed that the FBM KLCI is short term bearish and weak, and is likely to extend the consolidation.
The short term trend of the FBM KLCI remained bearish as the index continued to stay below the short term moving averages. The medium term trend is at test now as the key index is holding on the medium term 50 and 60-day SMA, and a break below the 1,638-point support level will see the FBM KLCI sliding lower to the 61.8% Fibonacci retracement support level at 1,627, and the critical long term support provided by the 120-day SMA is at 1,623. As the year-end school holiday is starting next week, the market is likely to go into an extended consolidation mode before the year-end windows dressing comes back to prop it up.
Overnight, the Dow fell a hefty 312.95 points or -2.36% to close at 12,932.73. Today, the FBM KLCI is likely to trade within a range of 1,635 to 1,656.
This week's expected range: 1625 – 1702
Today’s expected range: 1635 – 1656
Resistance: 1649, 1653, 1656
Support: 1635, 1639, 1642