Stocks on Bursa Malaysia closed lower yesterday on weak buying momentum amid external volatility on anticipation of the US' Federal Reserve's July meeting minutes which is scheduled to be announced this Wednesday. The FBM KLCI eased by 9.88 points or 0.55% to close at 1,778.36 opening 13.74 points lower and moved between 1,788.43 and 1,771.65. Market breadth was negative with 515 losers and 339 gainers, while 278 counters were unchanged. Turnover rose to 3.158 billion shares worth RM2.441 billion versus last Friday's 2.131 billion shares worth RM1.617 billion.
Taking cue from the negative close of the Dow last Friday, the FBM KLCI opened lower with a downside gap of 13.74 points at 1,774.50 and slipped to the intra-day low of 1,771.65 within the first three minutes after opening, losing 16.59 points at its worst. The key index rebounded strongly from the low to the intra-day high of 1,788.43 near noon but succumbed to continuous selling pressure and pulled back to close off high. Chart-wise, the FBM KLCI formed a white inverted hammer candlestick, a bottom reversal candlestick pattern which indicates the appearance of buying support after falling continuously for the fourth sessions. However, the reversal still needs further confirmation. Immediate downside support zone is at 1,771 to 1,766 while the overhead resistance zone is at 1,788 to 1,791.
MACD and its histogram continued to slide lower, indicating an increased in the bearish momentum. RSI (14) fell to 45 from 51.6, indicating the short term relative strength of the key index has turned mildly bearish from a neutral state. Stochastic slid lower to 44.5 from 54.9, and has made a dead-cross over the slow stochastic line, issuing a short term sell signal. Readings from the indicators showed that the FBM KLCI has turned bearish for the short term, and the bearish momentum is likely to drag the index lower.
The immediate short term trend of the FBM KLCI has turned down as the key index is now closing below all the short term moving averages, and is staying just above the medium term 50 and 60-day SMA support at 1,777. A break of this immediate medium term support will see the medium term trend also turned bearish, and the key index sliding lower to the next lower support of 1,766, follow by the 1,750-point psychological support level, which coincides with the 100-day SMA at 1,753. Nevertheless, the long term uptrend is still intact at the moment. Judging from the volume traded, the second and third liners stocks will continue with their rotational play while the key blue-chips continue to consolidate.
Overnight, the Dow fell 70.73 points or -0.47% to close at 15,010.74. Today, the FBM KLCI is likely to trade within a range of 1,753 to 1,805.
This week's expected range: 1753 – 1824
Today’s expected range: 1753 – 1805
Resistance: 1787, 1796, 1805
Support: 1753, 1762, 1770
Stocks to watch: DAYA, DESTINI, ENCORP, GOB, INARI, OKA, MALTON, MTOUCHE, UCHITEC