Stocks on Bursa Malaysia closed lower yesterday as most investors remained on the sidelines ahead of the outcome of the United States Federal Open Market Committee (FOMC) meeting later in the day, and most regional bourses were in the red. Recent mixed data on the health of the U.S. economic recovery is expected to encourage the Fed to leave its ultra-loose policy unchanged, but markets are on alert for any hints on when or how quickly it could wind back its bond buying. The FBM KLCI fell 1.17 points or 0.07% to 1,772.88, after hovering between 1,772.07 and 1,782.41 throughout the day. Losers led gainers by 417 to 352 while 311 counters were unchanged. Total volume slipped to 1.434 billion shares worth RM1.821 billion compared with 1.486 billion shares worth RM1.773 billion on Tuesday.
Taking cue from the strong gain on Wall Street overnight, the FBM KLCI opened 3.24 points higher at 1,777.29 and surged to the intra-day high of 1,782.41 within the first twenty minutes of trading, and heavy profit-taking activity which set in sent the key index to the intra-day low of 1,772.07 at late morning before rebounding to move sideways till closing. Chart-wise, the FBM KLCI formed a bearish black inverted hammer or shooting-star candlestick, a top reversal candlestick pattern which indicates initial push up follow by heavy distribution. Hence, the FBM KLCI is likely to continue sliding lower today. Immediate downside support is at 1,765 follow by 1,758 while the overhead resistance zone is at 1,782 to 1,792.
MACD was marginally lower or almost flat, but its histogram further contracted upward, indicating a continued reduction in the bearish momentum. RSI (14) hooked downward slightly to 53.4 from 53.9, reflecting the mild loss in the key index, and the short term relative strength of the key index is still in a mildly bullish state. Stochastic continued to climb higher to 60.6 from 53.4, indicating a further improvement in the market strength and continuation of the short term up cycle. Mixed signals from the indicators showed that the FBM KLCI is still in a consolidation state.
The immediate short term trend of the FBM KLCI is up as the key index continued to close above the 5 and 10-day SMA. However, as the 5-day SMA is still staying below the 10-day SMA, the recent up move may well be just a technical rebound, and a pullback correction is likely as shown by yesterday's candlestick formation. The short term trend still remained sideways range-bound as the index continued to stay within the range of 1,743 to 1,795, while the longer term trend still remained up. With volume shrinking further, the market is likely to slip into consolidation mode.
Overnight, the Dow fell 206.04 points or -1.35% to close at 15,112.19. Today, the FBM KLCI is likely to trade within a range of 1,758 to 1,792.
This week's expected range: 1716 – 1815
Today’s expected range: 1758 – 1792
Resistance: 1779, 1786, 1792
Support: 1758, 1765, 1769
Stocks to watch: FAVCO, GTRONIC, GUH, ILB, MAHSING, MAYBULK, MUHIBAH, YEELEE