Stocks on Bursa Malaysia closed lower yesterday on last-minute sell-off as investors feel the FBMKLCI is already richly-valued following previous day’s record high. The benchmark index fell 10 minutes before closing and ended 2.39 points or 0.13% lower at 1,821.9 after hovering between 1,819.96 and 1,828.46. Losers led gainers by 394 to 347, with 319 counters unchanged. Volume transacted totaled 1.19 billion shares worth RM1.54 billion against Tuesday’s 1.24 billion shares worth RM2.1 billion.
Taking cue from the 94 points retreat of the Dow overnight, the FBMKLCI opened 4.33 points lower at 1,819.96, the lowest points of the day, and rebounded to move gradually higher to hit the intra-day high 1,828.46 at late morning. The key index came under mild profit-taking pressure and slipped lower from the intra-day high, but was staying in the positive territory. However, a last minute sell down on selected blue-chips dragged the index to close in the negative zone. Chart-wise, the FBMKLCI formed a white inverted hammer candlestick which indicates heavy profit-taking activity, and it also confirmed the reversal signal generated by the black shooting-star candlestick formed the previous day. Hence, the FBMKLCI is likely to continue to consolidate if the profit-taking activity continues. Immediate downside support zone is at 1,819 to 1,810.
MACD continued to climb higher, and so is the histogram, indicating a further increased in the bullish momentum. However, RSI (14) hooked downward to 65.3 from 67.8, reflecting a mild profit taking, and the key index is still in the bullish state. Stochastic slipped lower to 77.8 from 86.4 and has crossed below the slow stochastic line, indicating short term weakness is developing and the possible beginning of a short term down cycle. Readings from the indicators showed that the FBMKLCI is undergoing a mild pullback correction, but is still in a bullish state.
The overall trend of the FBMKLCI remained up as the key index continued to above all the short, medium and long term moving averages. Nevertheless, as the FBMKLCI shot up too much in too short a time, a pullback correction due to profit-taking is inevitable, and the key index has indeed corrected yesterday. As the long term trend still remained up, any short term weakness should be viewed as an opportunity to accumulate quality shares for longer term gain.
Overnight, the Dow fell 24.85 points or -0.16% to close at 15,889.77. Today, the FBM KLCI is likely to trade within a range of 1,809 to 1,837.
This week's expected range: 1778 – 1833
Today’s expected range: 1809 – 1837
Resistance: 1826, 1831, 1837
Support: 1809, 1814, 1818
Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. The Stocks to watch is not a recommendation to buy or sell the particular stock, as it is only meant for graduates of the "Share Trading the Pro Way" course as case study. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.