Stocks on Bursa Malaysia ended lower yesterday on the first day of trading for 2014, weighed down by profit taking after recent gains. At close, the FBMKLCI fell by 14.01 points or 0.75% to settle at 1,852.95, after opening 1.23 points lower at 1,865.73 and fluctuated between 1,848.83 and 1,868.29 throughout the day. Losers thumped gainers by 406 to 347, with 302 counters unchanged. Volume declined to 1.24 billion shares worth RM1.35 billion from 1.49 billion shares valued at RM1.67 billion on Tuesday.
The FBMKLCI opened 1.23 points lower at 1,865.73 and rebounded to hit the intra-day high level of 1,868.29 at mid-morning. However, the rise could not be sustained, and the key index slipped on heavy profit-taking for the rest of the day to hit the intra-day low of 1,848.83 before last minute bargain hunting lifted it to close off low. Chart-wise, the FBMKLCI formed a bearish black candlestick which indicates the bears or sellers were dominant for the day in pushing the index lower. Hence, the FBMKLCI is likely to continue its bearish downward move to slide lower today. Immediate downside support zone is at 1,848 to 1,840, while the overhead resistance is at 1,868.
MACD has hooked downward, and its histogram also contracted after expanding upward for four consecutive sessions, indicating a pullback correction is taking place. RSI (14) slipped lower to 58.9 from 68.7, indicating a strong pullback in the key index, and the short term relative strength has retreated to a mildly bullish state from a bullish state. Stochastic slide lower to 70.6 from 87.4 and has crossed below the slow stochastic line, indicating the key index has turned weak for the short term and the beginning of a short term down cycle. Readings from the indicators showed that the FBMKLCI is in a pullback correction mode, and is likely to further correct down after the recent gains.
The long term trend of the FBMKLCI still remained up and bullish. However, for the immediate short term, the FBMKLCI is likely to further correct downward as the index has closed below the 5-day SMA, but found some support from the 10-day SMA yesterday as it rebounded off it. A further break of the 10-day SMA support at 1,850 will see the key index sliding lower to the lower support zone of 1,843 to 1,830 provided by the 20 and 30-day SMA. Nevertheless, as the long term trend is still up, any short term weakness should be viewed as an opportunity to accumulate quality shares for longer term profit.
Overnight, the Dow fell 135.31 points or -0.82% to close at 16,441.35. Today, the FBM KLCI is likely to trade within a range of 1,825 to 1,887.
This week's expected range: 1804 – 1896
Today’s expected range: 1825 – 1887
Resistance: 1864, 1876, 1887
Support: 1825, 1837, 1845
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