Stocks on Bursa Malaysia closed on a lower note yesterday, with losses mostly seen in banking and palm oil stocks, as the local bourse may have been affected by market talk over the upcoming general election. Most Asian bourses traded weaker yesterday on investors growing wary of recent index highs and mixed signals overnight from global equities, while the sterling remained vulnerable after weak UK data fed fears of a triple-dip recession. The FBM KLCI fell 10.32 points or 0.62% to end at 1,646.22 after opening at 1,653.47 and hovered between 1,641.74 and 1,653.88 throughout the day. Decliners led advancers by 477 to 225, with 284 counters unchanged. Total volume slipped to 766.76 million shares valued at RM1.65 billion from Tuesday's 931.93 million shares valued at RM1.72 billion.
The FBM KLCI opened with a downside gap of 3.07 points at 1,653.47 and slipped lower for the rest of the day on continued selling pressure to hit the intra-day low of 1,641.47 before rebounding on last minute buying of selected blue-chips. Chart-wise, the FBM KLCI formed a bearish black candlestick which indicates selling pressure and a confirmation of the reversal signal issued by the dark-cloud-cover candlestick pattern appeared on Tuesday. The key index is likely to slip lower to the immediate downside support zone of 1,641 to 1,632.
MACD has hooked downward and so is the histogram, indicating further loss in the index's momentum. RSI (14) dipped lower to 54 from 63.4, indicating the key index has turned mildly bullish from bullish. Stochastic has slipped lower to 84.8 from 93.7, indicating a further loss in the market strength, and continuation of the short term down cycle which began yesterday. Readings from the indicators showed that the FBM KLCI has started to turn weak after the recent rally, and the key index is likely to further consolidate.
The immediate short term trend of the FBM KLCI has turned weak as the key index has closed below the 5 and 10-day SMA but is still above the 20 and 30-day SMA, and the medium term trend is sideways while the long term trend is still up. With the bearish down move yesterday, the FBM KLCI has again closed below the 50 and 60-day SMA and is sitting right on the 120-day SMA. A further break below the 120-day SMA would likely see the index slipping lower to the next support zone of 1,640 to 1,631 provided by a cluster of short and long term moving averages. The threat of a Head-and-Shoulder chart pattern formation has not been total remove yet as it would depends on how deep the current pullback goes.
Overnight, the Dow rose 5.22 points or +0.04% to close at 14,455.28. Today, the FBM KLCI is likely to trade within a range of 1,628 to 1,666.
This week's expected range: 1598 – 1690
Today’s expected range: 1628 – 1666
Resistance: 1653, 1659, 1666
Support: 1628, 1635, 1640