Stocks on Bursa Malaysia ended lower yesterday on cautious trading and lack of demand, amid the sluggish economic backdrop. Investors were reluctant to hold position as they awaited a clear market lead before making any decision. Adding to the cautious sentiment was news that Euro-zone finance ministers had failed to resolve Greece’s debt issues. The FBM KLCI eased 1.23 points or 0.08% to 1,622.97 after hovering between 1,624.42 and 1,619.39. Losers led gainers by 349 to 275, while 360 counters were unchanged. Volume rose to 1.03 billion shares worth RM1.59 billion from Tuesday's 1.02 billion shares worth RM1.69 billion.
The FBM KLCI opened 0.09 of a point lower at 1,624.11 and rebounded to the intra-day high of 1,624.42 at mid morning but succumb to the continuous selling pressure which sent it to the intra-day low of 1,619.39 before rebounding to close off low. Chart-wise, the FBM KLCI formed a black hammer candlestick, a bottom reversal candlestick pattern, which indicates buying support appearing at current level. However, as it is a black candlestick, there is still a bearish bias. Immediate strong support was seen at the 1,620-point level which coincided with the 38.2% Fibonacci retracement support level for the range measuring from the pivot low of 1,526 formed on May 18th 2012 to the pivot high of 1,679, and a close below the 1,620-point support level might see the FBM KLCI sliding lower to the 50% Fibonacci retracement support level at 1,602.
MACD continued to slide lower but its histogram contracted upward for a second bar, indicating a further reduction in the bearish momentum. RSI (14) hooked downward slightly to 28 from 28.7, reflecting the mild loss in the key index, and short term relative strength is still in the very bearish or oversold zone . Stochastic hooked downward to a new low value of 5.7, indicating the bearish down cycle is still intact. Readings from the indicators showed that the FBM KLCI is still generally weak and short term oversold, however, the MACD histogram has given out a sign that the downward momentum is waning, and a rebound might be expected.
The trend of the FBM KLCI remained down and bearish. However, the price action over the last three trading sessions showed that the FBM KLCI is trying to form base or consolidate at current level, and hence, the key index may continue to move sideways range-bound within a range of 1,619 to 1,630. Volume remained above the one billion shares mark but value traded was slightly lower, indicating a market dominated by the lower liners.
Overnight, the Dow rose 48.38 points or +0.38% to close at 12,836.89. Today, the FBM KLCI is likely to trade within a range of 1,615 to 1,630.
This week's expected range: 1606 – 1657
Today’s expected range: 1615 – 1630
Resistance: 1625, 1627, 1630
Support: 1615, 1617, 1620
Stocks to watch: ALAM, BRAHIMS, DUTALAND, PTGTIN, SCOMI