Stocks on Bursa Malaysia closed lower yesterday, weighed by losses in selected heavyweights amid the lack of strong leads. The benchmark FBMKLCI fell 8.51 points or 0.46% to 1,845.37 after moving between 1,845.37 and 1,854.62 throughout the day. Market breadth was positive with gainers outpacing losers by 441 to 374 while 343 counters were unchanged. Turnover was lower at 2.40 billion shares valued at RM2.25 billion from Tuesday’s 2.58 billion shares valued at RM2.5 billion.
Taking cue from the rebound on Wall Street overnight, the FBMKLCI opened 0.74 of a point higher at the intra-day high of 1,854.62 and slipped lower on heavy profit-taking activity. The key index rebounded intermittently but persistent selling pressure sent it to close at the lowest point of the day. Chart-wise, the FBMKLCI formed a bearish Marubozu candlestick with a bearish engulfing pattern, a bearish candlestick pattern which indicates heavy selling pressure on the key index, and hence, the FBMKLCI is likely to move today if the selling pressure persisted. Immediate downside support zone is at 1,842 to 1,838, while the overhead resistance zone is at 1,854 to 1,860.
MACD continued to slide lower and the histogram also extended downward, indicating an increase in the bearish momentum. RSI (14) slipped lower to 51.4 from 58.4, indicating heavy correction which pulled the key index to the neutral zone from a mildly bullish state. Stochastic slid lower to 42.8 from 55.8, has moved below the 50-level, indicating increasing weakness and continuation of the short term down cycle. Readings from the indicators showed that the FBMKLCI is turning weak and bearish, and hence, is likely to further correct downward or consolidate.
The short term trend of the FBMKLCI has turned down as the key index is now closing below the short term 5, 10, 15 and 20-day SMA, and the index is likely to slip lower to the lower support zone of 1,838 to 1,832 provided by the 30 and 50-day SMA. Nonetheless, the medium and longer term trend of the FBMKLCI still remained up. Hence, current weakness may be viewed as an opportunity to accumulate quality shares at lower price level. As the index-linked counters consolidate, the broader market is likely to see more rotational play on small-cap and penny stock as can be seen from the active volume traded.
Overnight, the Dow rose 162.29 points or 1.00% to close at 16,424.85. Today, the FBM KLCI is likely to trade within a range of 1,833 to 1,863.
This week's expected range: 1831 – 1877
Today’s expected range: 1833 – 1863
Resistance: 1851, 1857 1863
Support: 1833, 1839, 1842
Stocks to watch: ALAM, DUTALND, EITA, KGB, KNM, OCK, PASDEC, PELIKAN, PESONA, REDTONE, SENDAI, SONA, TAS, ZELAN
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