Stocks on Bursa Malaysia ended lower yesterday on cautious external sentiments amid anticipation of the US and China's monetary tightening concerns. The FBM KLCI declined 17.66 points or 1.01% to 1,738.19, after hovering between 1,737.99 and 1,756.02 throughout the day. Losers thrashed gainers by 797 to 121 while 193 counters were unchanged. Total volume fell to 1.671 billion shares worth RM2.188 billion compared to 2.052 billion shares worth RM3.788 billion on Friday.
The FBM KLCI opened 0.09 of a point lower at 1,755.76 and rebounded briefly to the intra-day high of 1,756.02. However, selling pressure which emerged sent the key index lower for the rest of the day to hit the intra-day low of 1,737.99 before rebounding slightly to close off low. Chart-wise, the FBM KLCI formed a long black Marubozu-like bearish engulfing candlestick pattern which indicates heavy selling pressure and sellers were in full control for the day. Hence, the FBM KLCI is likely to continue its downward move to slide lower today. Immediate downside support is at 1,730, follow by 1,725 and 1,718, while the overhead resistance zone is at 1,743 to 1,756.
MACD continued to slide lower and is approaching the zero-line, indicating the FBM KLCI is about to turn bearish for the medium term. RSI (14) slipped lower to 40.1 from 48.9, indicating the FBM KLCI has turned bearish for the short term. Stochastic slipped lower to 23.9 from 43.8, indicating a further weakening of the market strength and continuation of the short term down cycle. Readings from the indicators showed that the FBM KLCI has turned bearish, and is likely to continue to stay bearish for a while.
The short term trend of the FBM KLCI is down and bearish, and the medium term trend has also turned down and bearish yesterday as the key index has closed below the 60-day SMA. Hence, more downside is expected for the FBM KLCI in the near term, as the barometer index is likely to slide lower to cover the gap formed on May 6, and may even test the psychological support of 1,700. Nevertheless, the correction actually present an opportunity to buy into quality shares at lower price level for longer term gain as the longer term trend is still up at the moment.
Overnight, the Dow fell 139.84 points or -0.94% to close at 14,659.56. Today, the FBM KLCI is likely to trade within a range of 1,714 to 1,774.
This week's expected range: 1690 – 1827
Today’s expected range: 1714 – 1774
Resistance: 1750, 1762, 1774
Support: 1714, 1726, 1732