Stocks on Bursa Malaysia closed slightly higher yesterday, supported by late buying interest which helped pare losses in the earlier session. The volatile market movement was mainly influenced by the long-awaited announcement on the 13th general election. Panic selling was seen on the local bourse, resulting in the key index falling more than 50 points, an hour before the prime minister went “live” over television for the announcement of the dissolution of the Parliament to pave the way for the general election. However, the FBM KLCI started to stabilise later as investors resumed their activities and began bargain hunting. The FBM KLCI inched up 0.40 of a point to close at 1,685.40, after opening 3.33 points higher at 1,688.33. The key index dipped to a low of 1,632.28, while scaling a high of 1,692.85 for the day. Decliners led losers by 585 to 237 with 300 counters unchanged. Turnover advanced to 1.345 billion shares worth RM2.893 from the 1.007 billion shares worth RM1.976 billion on Tuesday.
Taking cue from the strong performance of the Dow overnight, the FBM KLCI opened with an upside gap of 3.33 points higher at 1,688.33 and continued moving higher to hit the intra-day high of 1,692.85 in the first thirty minutes of trading. Market sentiments changed suddenly when it is confirmed that the Prime Minister is to make a live telecast announcement at 11.30 a.m. and the key index started to plunge on heavy selling pressure to the intra-day low of 1,632.28, losing 52.72 points or 3.13% in a short span of forty five minutes, but strong buying support and bargain hunting for blue-chip stocks was seen coming in which help to push the FBM KLCI to close marginally higher after a volatile day. Chart-wise, the FBM KLCI formed a black hanging-man candlestick with long lower shadow, a key top reversal candlestick pattern, which indicates the appearance of heavy selling pressure but the buying support was strong enough to cover it. Hence, the FBM KLCI is likely to further correct or consolidate today. Immediate downside support zone is at 1,668 to 1,659 while the overhead resistance zone is at 1,692 to 1,699.
MACD and its histogram continued to climb higher, indicating an further increased in the upward momentum. RSI (14) was marginally higher at 69.7 from 69.6, indicating a marginal increase in the relative strength or a reduction in the upward momentum after a strong up move the previous day. Stochastic was higher at 90.4 from 88.9, indicating a continuation of the up cycle but the market strength is reducing. Readings from the indicators showed that the FBM KLCI is still in a bullish state but the upward momentum is reducing, and hence is likely to consolidate in the short term.
The trend of the FBM KLCI remained up. However, the panic selling yesterday showed that the key index might have peaked yesterday after touching an intra-day high of 1,692, and the FBM KLCI is likely to consolidate itself first before making any attempt to challenge the all-time high level of 1,699.68. As mentioned in previous analysis, the FBM KLCI is still trapped in a big sideways range of 1,699 to 1,590 and is likely to move within this range while waiting for the 13th General Election to take place.
Overnight, the Dow fell 111.66 points or -0.76% to close at 14,550.35. Today, the FBM KLCI is likely to trade within a range of 1,647 to 1,708.
This week's expected range: 1607 – 1712
Today’s expected range: 1647 – 1708
Resistance: 1692, 1699, 1708
Support: 1647, 1659, 1676