Stocks on Bursa Malaysia closed lower yesterday on lack of buying interest from the investors. The market was quiet with investors sidelined and awaiting positive outcome from the US in solving its fiscal cliff issue. The FBM KLCI fell 5.97 points or -0.37% to close at 1,623.31, after hovering between 1,620.51 and 1,626.96. Losers led gainers by 378 to 280, while 335 counters were unchanged. Volume fell to 848.81 million shares worth RM1.112 billion from 895.96 million shares worth RM1.75 billion last Friday.
The FBM KLCI opened lower with a down gap of 5.1 points at 1,624.18 and rebounded to the intra-day high of 1,626.96 within the first fifteen minutes of trading. However, the key index slide lower on selling pressure to hit the intra-day low of 1,620.51 at mid-morning before rebounding to move sideways for the rest of the day. Chart-wise, the FBM KLCI formed a black spinning-top candlestick which indicates indecision or uncertainty of market direction. Nonetheless, as this candlestick formed after a downtrend, it also indicates a waning of selling pressure and a possible reversal maybe insight, and hence, the FBM KLCI is likely to stage a rebound. Immediate overhead resistance zone is at 1,627 to 1,635 while the downside support is at 1,620.
MACD and its histogram continued to slide lower, indicating an increased in the bearish momentum. RSI (14) was lower at 27.5, indicating a very bearish state of short term relative strength and an oversold situation. Stochastic continued to slide lower to 6.1, indicating a very weak market strength and the market is deeply oversold. Readings from the indicators showed that the FBM KLCI is currently bearish and is short term oversold, and a rebound might be expected.
The trend of the FBM KLCI has turned bearish as the key index is closing below the short, medium and long term moving averages. The FBM KLCI has closed below the important 120-day SMA yesterday, giving out a first long term bearish signal. Nevertheless, the key index is still above the longer term 200 and 240-day SMA which are currently at 1,605 and 1,587, and a break below these two long term moving averages would confirm a bear market. On the flip side, in order to reverse the current downtrend, the FBM KLCI must move above the 30-day SMA which is currently at 1,656.
Overnight, the Dow rose 207.65 points or +1.65% to close at 12,795.96. Today, the FBM KLCI is likely to trade within a range of 1,613 to 1,633.
This week's expected range: 1606 – 1657
Today’s expected range: 1613 – 1633
Resistance: 1627, 1630, 1633
Support: 1613, 1617, 1620
Stocks to watch: PANTECH, SCOPE, UOADEV