Stocks on Bursa Malaysia closed mixed yesterday with the benchmark FBM KLCI retreated from opening session gains to close in red territory amid global economic outlook concerns. Global economic outlook concerns were renewed after a series of positive economic data in the US, added to investor expectations, that the Federal Reserve would start scaling back its monetary stimulus this year. The local market pared earlier gains and fell as worries about the tapering of the stimulus programme weighed on broader Asia, especially emerging markets, which had been its major benefactor. At close, the FBM KLCI fell 1.36 points or 0.08% to 1,793.73 after opening 4.86 points higher at 1,799.95 and moved between 1,791.46 and 1,801.26 throughout the day. Gainers outpaced losers 447 to 348 with 306 counters unchanged. Total turnover firmed to 2.2 billion shares worth RM1.7 billion from 1.99 billion shares worth RM1.86 billion on Tuesday.
Taking cue from the rebound of the Dow overnight, the FBM KLCI opened higher with an upside gap of 4.86 points at 1,799.95 and surged to the intra-day high of 1,801.26 within the first three minutes after opening. The key index fell from the intra-day high on heavy profit-taking activity to hit the intra-day low of 1,791.46 before recovering slightly to close off low. Chart-wise, the FBM KLCI formed a bearish dark-cloud-cover candlestick pattern, a two days top reversal candlestick pattern, which indicates heavy profit-taking or distribution activity when the key index approaches the 1,800-point psychological resistance level. Hence, the FBM KLCI is likely to further correct downward or pause for a consolidation after recent gains. Immediate downside support zone is at 1,791 to 1,788, while the overhead resistance is at 1,801.
MACD was marginally higher and the histogram further contracted upward, indicating a further reduction of the bearish momentum. Nevertheless, as the MACD is still below the signal-line, the current positive development may turned out to be just a technical rebound. RSI (14) hooked downward to 55.8 from 56.8, reflecting a mild pullback in the key index, and the short term relative strength is still mildly bullish. Stochastic was higher at 54.3 from 43.7, indicating a continuation of the short term up cycle and mild improvement in the market strength. Readings from the indicators showed that the short term momentum of the FBM KLCI is still up amid a mild pullback.
The trend of the FBM KLCI remained up as the key index continued to stay above all the moving averages. Nevertheless, the price action of the FBM KLCI yesterday showed that the market was not ready to push through the 1,800-point psychological level as can be seen from the heavy intra-day profit-taking. Hence, the FBM KLCI may continue to move sideways range-bound within a range of 1,811 to 1,766 until a solid breakout is observed on either side of this range.
Overnight, the Dow fell 113.35 points or -0.73% to close at 15,337.66. Today, the FBM KLCI is likely to trade within a range of 1,779 to 1,811.
This week's expected range: 1744 – 1827
Today’s expected range: 1779 – 1811
Resistance: 1799, 1805, 1811
Support: 1779, 1785, 1789
Stocks to watch: HANDAL, IRCB, MAS, OCK, REDTONE, WASEONG, WILLOW, YLI