Stocks on Bursa Malaysia closed lower yesterday weighed down by losses in blue chips despite robust trading in small cap and penny stocks. Small-cap and penny stocks dominated the day's trading with strong rotational interest boosting retail participation, but were offset by a series of losses in blue chips amid concerns over US stimulus cuts. The FBMKLCI fell 1.64 points or 0.09% to 1,827.81, after moving between 1,822.79 and 1,830.18 throughout the day. Losers outnumbered gainers by 450 to 379, while 332 counters were unchanged. Volume fell to 2.99 billion shares worth RM2.5 billion from Wednesday’s 3.28 billion shares worth RM2.39 billion.
The FBMKLCI opened 0.73 of a point higher at the intra-day high level of 1,830.18 and slipped lower on profit-taking activity for the rest of the day to hit the intra-day low of 1,822.79, losing 6.66 points at its worst, before rebounding in the last hour to narrow the losses to 1.64 points. Chart-wise, the FBMKLCI formed a bearish black hanging-man candlestick, a one-day reversal candlestick pattern which indicates distribution after a rise the day before. Hence, the FBMKLCI is likely to remain in sideways consolidation mode. Immediate overhead resistance zone is at 1,830 to 1,838, while the downside support zone is at 1,820 to 1,813.
MACD was marginally higher, but its histogram further contracted downward, indicating a state of consolidation. RSI (14) hooked downward to 55.9 from 56.8, indicating a mild pulled back in the key index. Stochastic was marginally higher at 90.74 from 90.56, indicating a lack of momentum or a state of consolidation. Readings from the indicators showed that the FBMKLCI is currently in a state of consolidation.
The short term trend of the FBMKLCI has turned sideways range-bound with an upward bias as the key index continued to move within a narrow range of 1,813 to 1,833, while the 5-day simple moving average (SMA) continued to stay above the 10-day SMA, and a breakout from the immediate resistance at 1,833 would see a rally toward the 1,838 to 1,850 zone. The medium term trend is also sideways range-bound as the index continued to fluctuate around the mid-range of the retracement range of 1882.2 to 1,769.8. Nevertheless, the long term trend still remained up. As the index-linked blue-chip stocks consolidate, the small-cap and penny stocks are likely to continue their rotational play judging from the high volume traded.
Overnight, the Dow rebounded 92.67 points or 0.58% to close at 16,133.23. Today, the FBM KLCI is likely to trade within a range of 1,816 to 1,837.
This week's expected range: 1795 – 1845
Today’s expected range: 1816 – 1837
Resistance: 1831, 1834, 1837
Support: 1816, 1819, 1823
Stocks to watch: ASIABIO, EVERGRN, FORMIS, IRIS, MAA, PESONA, REDTONE, SEAL, TAMBUN, TROP, UNISEM, YEELEE
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