Stocks on Bursa Malaysia closed broadly lower yesterday extending their losses from Tuesday, in line with weak regional sentiments. The benchmark FBMKLCI finished 4.13 points or 0.22% lower at 1,877.03, after fluctuating between 1,874.14 and 1,882.27 throughout the day. Decliners thumped advancers by 502 to 293 with 319 counters unchanged. Volume decreased to 1.88 billion shares worth RM1.95 billion from 2.036 billion shares worth RM2.043 billion transacted on Tuesday.
Despite weak performance on Wall Street overnight, the FBMKLCI opened 0.67 of a point higher at 1,881.83 and surged to the intra-day high of 1,882.27 within the first ten minutes after opening. However, the rise could not sustain, and the key index slipped lower on continuous selling pressure throughout the day to hit the intra-day low of 1,874.14 just before market close. Nonetheless, some last minute bargain hunting activities manage to lift the index off low. Chart-wise, the FBMKLCI formed a bearish black candlestick which continues the downtrend from Tuesday. Hence, the FBMKLCI is likely to continue to slide lower if it breaks the immediate support at 1,874 today to the next lower support zone of 1,872 to 1, 867, the gap area formed on May 14.
MACD has turned down, and its histogram also slid lower, indicating further loss in momentum. However, as MACD is still above the signal-line, current weakness may be viewed as just a short term pullback correction. RSI (14) was lower at 59.7 from 64, indicating further weakening of the index’s short term relative strength to the mildly bullish state from a bullish state. Stochastic slipped lower to 79.1 from 89.8, breaking below the 80-mark, which indicates further weakness is expected ahead. Readings from the indicators showed that the FBMKLCI is currently undergoing a short term pullback correction after making new highs recently.
The immediate near term trend of the FBMKLCI has turned down as the key index has now closed below the 5-day SMA. The key index rebounded from the 10-day SMA yesterday after hitting into it, indicating there was some short term buying support for index-linked counters. However, the rebound was not strong enough to reverse the immediate downtrend, and hence, the FBMKLCI is likely to further consolidate to digest the selling pressure arising from short term profit-taking activity. A further break of the critical support at 1,872 will likely see the key index sliding lower to close the breakaway gap formed on May 14, leading to an extended consolidation.
Overnight, the Dow rebounded 158.75 points or +0.97% to close at 16,533.06. Today, the FBM KLCI is likely to trade within a range of 1,865 to 1,890.
This week's expected range: 1852 – 1902
Today’s expected range: 1865 – 1890
Resistance: 1881, 1885 1890
Support: 1865, 1869, 1873
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