Stocks on Bursa Malaysia ended mixed in cautious trading yesterday with last-minute buying, particularly in finance and industrial stocks and selected heavyweights, helping push the Composite Index into positive territory. The market swung between gains and losses with most investors awaiting a clearer picture of the US fiscal cliff issues as well as renewed concerns on economic development in Europe. The FBM KLCI edged up 0.89 point to close at 1,624.20 after hovering within a range of 1,628.30 and 1,622.62. Losers led gainers by 358 to 298, while 362 counters were unchanged. Volume rose to 1.02 billion shares worth RM1.69 billion from the 848.81 million shares worth RM1.112 billion on Monday.
Taking cue from the strong performance of Wall Street overnight, the FBM KLCI opened 3.13 points higher at 1,626.44 and surged to the intra-day high of 1,628.30 within the first twenty minutes of trading. The key index then slid lower gradually on persistent selling pressure which sent it to the intra-day low of 1,622.62 before rebounding on last minute buying which pushed it back to the positive territory. Chart-wise, the FBM KLCI formed a small black spinning-top candlestick which indicates consolidation and uncertainty of market direction. With two black spinning-top candlesticks forming over the last two days, it means the downward pressure is waning and the key index is trying to settle around current level. Immediate downside support is at 1,620 while the overhead resistance is at 1,628.
MACD continued to slide lower, but its histogram contracted for the first time after twelve sessions of bearish expansion, indicating a pause in the bearish downward momentum. RSI (14) hooked upward to 28.7 from 27.5, reflecting the mild rebound in the key index and the short term relative strength is still in the very bearish or oversold zone. Stochastic also hooked upward mildly to 6.5 from 6.1, but is still below the slow stochastic line and is short term oversold. Readings from the indicators showed that the FBM KLCI is undergoing a mild rebound after hitting the short term oversold level, and is likely to consolidate at current level but with a potential to rebound.
The trend of the FBM KLCI is currently down as the key index is closing below the short, medium and long term 120-day SMA. However, it is still above the 200-day SMA which the market generally used to judge a bull or bear market. A break below the 200-day SMA which is currently at 1,606-point would really spell bear for the FBM KLCI. Overall volume has increased to above the one billion shares mark after a holiday-shortened quiet week, and rotational play on the second and third liners is likely to dominate the active scene.
Overnight, the Dow fell 7.45 points or -0.06% to close at 12,788.51. Today, the FBM KLCI is likely to trade within a range of 1,616 to 1,634.
This week's expected range: 1606 – 1657
Today’s expected range: 1616 – 1634
Resistance: 1628, 1631, 1634
Support: 1616, 1619, 1621
Stocks to watch: DAYANG, JCY, PERDANA