Stocks on Bursa Malaysia closed broadly higher yesterday supported by gains in selected plantation and finance stocks. The FBMKLCI, however, was marginally lower, losing 0.11 point to 1,860.43 after hovering between 1,856.85 and 1,864.23 throughout the day. Market breadth was positive as gainers almost doubled losers by 460 to 273 while 339 counters were unchanged. Turnover was lower at 1.47 billion shares worth RM1.3 billion, from 1.54 billion shares worth RM1.39 billion recorded on Monday.
Taking cue from the rebound on Wall Street overnight, the FBMKLCI opened 0.19 of a point lower at 1,860.35 and rebounded to hit the intra-day high of 1,864.23 within the first twenty minutes after opening. However, the rebound could not sustain, and the key index fell on heavy profit-taking which sent it to the intra-day low of 1,856.85 within the next twenty five minutes, and the index rebounded from the low to move sideways range-bound for the rest of the day. Chart-wise, the FBMKLCI formed a Doji candlestick which indicates uncertainty of market direction, and the bulls and the bears were in equal strength yesterday. Hence, the FBMKLCI is likely to continue to consolidate today. Immediate overhead resistance zone is at 1,864 to 1,871, while the immediate downside support zone is at 1,856 to 1,852.
MACD and its histogram continued to slide lower, indicating further loss in momentum. RSI (14) was almost flat at 54.2 from 54.3, indicating a state of consolidation, and the key index is still in a mildly bullish state. Stochastic was lower at 68.3 from 82.5, and has made a dead-cross over the slow stochastic line, indicating possible further correction is in sight. Readings from the indicators showed that the FBMKLCI is in a state of consolidation and is likely to further consolidate.
The immediate near term trend of the FBMKLCI is down as it stays below the 5 and 10-day SMA. However, the key index managed to find some support from the short term moving averages as it rebounded from the 15 and 20-day SMA after piercing through them briefly and closed above them. Hence, the FBMKLCI is likely to stay sideways range-bound for the immediate term until a breakout is seen on either side of the range. The medium to longer term uptrend still remained intact, and hence, current weakness should be viewed positively as an opportunity to accumulate quality shares for longer term gain.
Overnight, the Dow fell 129.53 points or -0.78% to close at 16,401.02. Today, the FBM KLCI is likely to trade within a range of 1,849 to 1,871.
This week's expected range: 1837 – 1891
Today’s expected range: 1849 – 1871
Resistance: 1864, 1867 1871
Support: 1849, 1853, 1856
Stocks to watch: BENALEC, BHS, DESTINI, DIALOG, FARLIM, GADANG, KNM, LEWEKO, MPAY, PDZ, SCOPE, SYF, TAS, WONG, WPRTS
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