Stocks on Bursa Malaysia closed weaker yesterday on continued profit-taking, mostly in consumer and finance stocks. Regional bourses were mostly down as investors are keeping an eye on the US Federal Reserve's next course of action after its massive bond purchase in May. The benchmark FBM KLCI ended trading at an intra-day low of 1,766.33, down by 2.89 points or 0.16%, after hovering between 1,773.07 and 1,766.33. Market breadth was negative with losers leading gainers by 621 to 268 while 215 were unchanged. Volume rose to 2.31 billion shares valued at RM2.36 billion from 2.22 billion shares valued at RM3.45 billion last Friday.
The FBM KLCI opened 2.33 points higher at 1,771.55 and slipped lower. It rebounded to touch the intra-day high of 1,773.07 at late morning, but could not sustained the rise, and slid lower on continued selling pressure for the rest of the day to end at the lowest point of the day. Chart-wise, the FBM KLCI formed a bearish small black candlestick which indicates sellers were dominant for the day and the downtrend continues. Hence, the FBM KLCI is likely to continues its current weakness to further consolidate itself. Immediate downside support is at 1,765 while the overhead resistance zone is at 1,780 to 1,795. A break of the support of 1,765 will see the key index sliding lower to the next support at 1,752.
MACD and its histogram continued to slide lower, indicating a continued loss in momentum. Nevertheless, as MACD is still above the zero line, current weakness could well be just a short term correction. RSI (14) was lower at 54.8 from 56.3, indicating the short term relative strength of the key index has further weakened despite still in the mildly bullish zone. Stochastic plunged lower to 27 from 49.5, indicating the weakness has accelerated, and the short term cycle is down. Readings from the indicators showed that the FBM KLCI is currently weak and in a correction mode, and the weakness is likely to continue.
The short term trend of the FBM KLCI has turned bearish as the key index has closed below the short term 20-day SMA. Nevertheless, the medium and longer term uptrend of the FBM KLCI is still intact at the moment. For the immediate short term, the FBM KLCI is likely to stay sideways range-bound within a range of 1,743 to 1,795 until either one of the support and resistance is broken, and a continuation in that direction will prevail. As the FBM KLCI continues to correct, rotational play on the second and third liners are likely to continue if the volume remained in the region of two billion shares.
Overnight, the Dow rose 138.46 points or +0.92% to close at 15,254.03. Today, the FBM KLCI is likely to trade within a range of 1,757 to 1,779.
This week's expected range: 1739 – 1808
Today’s expected range: 1757 – 1779
Resistance: 1770, 1785, 1779
Support: 1757, 1761, 1764