Stocks on Bursa Malaysia ended in the red yesterday on lack of buying support amid absence of positive market leads, and sentiment remained weak as investors were cautious over the Chinese economy coupled with weak leads from the overnight Wall Street. The benchmark FBMKLCI ended 11.2 points or 0.61% lower at 1,822.55 after moving between 1,822.55 and 1,831.27 throughout the day. Losers led gainers by 558 to 291, with 288 counters unchanged. Volume fell to 2.45 billion shares worth RM2.38 billion, from 2.86 billion shares worth RM2.06 billion on Tuesday.
Taking cue from the weak overnight close on Wall Street, the FBMKLCI opened 3.54 points lower at 1,830.21 and rebounded to hit the intra-day high of 1,831.27 within the first five minutes after opening. However, the FBMKLCI continued to come under selling pressure which saw the key index sliding lower for the rest of the day with intermittent weak rebound to end at the lowest point of the day. Chart-wise, the FBMKLCI formed a bearish black candlestick which indicates sellers were dominant for the day, and hence, the FBMKLCI is likely to continue to consolidate today. Immediate downside support zone is at 1,819 to 1,813, while the overhead resistance zone is at 1,830 to 1,833.
MACD hooked downward for the first time after rising continuously for three weeks, and its histogram also further contracted, marking the possible beginning of a bearish correction. RSI (14) fell to 51.5 from 58.5, indicating the short term relative strength of the FBMKLCI has turned neutral with mild bullish bias from a mildly bullish state. Stochastic hooked downward to 88 from 95.2, and has crossed below the slow stochastic line, indicating the possible beginning of a short term down cycle. Readings from the indicators showed that the FBMKLCI has turned weak for the short term, and is likely to continue to consolidate.
The short term trend of the FBMKLCI remained sideways range-bound. However, the bearish down move yesterday has seen the key index closing below the 5 and 10-day SMA, marking the possible beginning of a short term downtrend. Hence, the FBMKLCI is likely to come under sort term selling pressure which might see it sliding lower to test the support zone of 1,813 to 1,800 in the near term. Nevertheless, the long term uptrend still remained intact. After a good three weeks run post Chinese New Year, some of the small-caps and penny stocks with good gains have gone into profit-taking correction mode. Nonetheless, rotational play on the second and third liners is likely to continue on stocks with different theme.
Overnight, the Dow rose 18.75 points or 0.12% to close at 16,198.41. Today, the FBM KLCI is likely to trade within a range of 1,810 to 1,840.
This week's expected range: 1808 – 1847
Today’s expected range: 1810 – 1840
Resistance: 1828, 1834, 1840
Support: 1810, 1816, 1819
Stocks to watch: AHB, BHS, ENGTEX, FLBHD, ILB, JAKS, KNM, KPS, LBS, MAYBULK, SALCON, YLI
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.