Stocks on Bursa Malaysia closed broadly lower yesterday due to the weaker regional sentiment as the sharp decline in Japan's Nikkei 225, attributed to the still unclear situation about the US quantitative easing programme, dragged down regional markets. The FBM KLCI, which retreated right after the lunch break, fell 8.23 points or 0.46% to 1,779.57 after hovering between 1,779.57 and 1,792.19 throughout the day. Market breadth was negative with losers thumped gainers by 598 to 255, while 282 were unchanged. Volume slipped to 2.233 billion units valued at RM2.556 billion from Monday's 2.417 billion units worth RM2.532 billion.
The FBM KLCI opened almost flat at 1,787.81 and climbed to the intra-day high of 1,792.19 in the first hour of trading. However, the rise could not sustain and the index fell on profit-taking. The afternoon session seen heavy selling pressure which pushed the key index to close at the intra-day low. Chart-wise, the FBM KLCI formed a bearish black candlestick which engulfs the previous white candlestick's body, indicating heavy selling pressure, and hence the FBM KLCI is likely to fall further today if the selling pressure continues. Immediate downside support zone is at 1,778 to 1,765 while the overhead resistance zone is at 1,792 to 1,795.
MACD hooked downward gently, but its histogram further contracted upward, indicating a state of consolidation. RSI (14) hooked downward to 57.7 from 62.4, reflecting the pullback in the key index and the short term relative strength has again turned mildly bullish from a bullish reading. Stochastic, however, continued to rise to 52.3 from 41.4, indicating the short term cycle is still up. Mixed signals from the indicators showed that the FBM KLCI is likely to stay in consolidation mode.
The overall uptrend of the FBM KLCI is intact, however, the short term trend has turned sideways, and the key index is likely to continue fluctuating within an immediate range of 1,765 to 1,795 until a breakout is seen on either side of the range. After congesting at current level for a month, the key index has shown sign of tiredness and is reluctant to push through the 1,792 overhead resistance level. Hence, the FBM KLCI is poised for a correction.
Overnight, the Dow fell -116.57 points or -0.76% to close at 15,122.02. Today, the FBM KLCI is likely to trade within a range of 1,762 to 1,804.
This week's expected range: 1756 – 1791
Today’s expected range: 1762 – 1804
Resistance: 1788, 1796, 1804
Support: 1762, 1771, 1775