Stocks on Bursa Malaysia ended marginally lower yesterday, with the benchmark FBMKLCI slipping 5.16 points or 0.27% to 1,871.58 after moving in a tight range of between 1,871.28 and 1,875.9 throughout the day in lackluster range-bound trading. Decliners led advancers by 401 to 384, while 310 counters were unchanged. Total volume decreased to 1.36 billion shares worth RM1.41 billion from the 1.26 billion shares valued at RM1.39 billion transacted on last Friday.
Despite a rebound on Wall Street last Friday, the FBMKLCI opened 1.22 points lower at 1,875.52 and surged to the intra-day high of 1,875.9 right after opening. However, the up move could not sustain and the key index slipped lower throughout the day on profit-taking activity to hit the intra-day low of 1,871.25 before rebounding slightly to close off low. Chart-wise, the FBMKLCI formed a bearish Harami candlestick pattern, a reversal pattern which indicates change in traders’ sentiment from an earlier bullish to a bearish mood. Hence, the FBMKLCI is likely to further correct downward or consolidate today. Immediate downside support zone is at 1,870 to 1,860, while the overhead resistance zone is at 1,876 to 1,880.
MACD turned downward after making a golden-cross on last Friday, indicating the earlier up move was merely a technical rebound, and hence, the FBMKLCI is likely to further consolidate. RSI (14) hooked downward to 51.4 from 55.5, indicating the short term relative strength of the key index has turned neutral from a mildly bullish state. Stochastic hooked downward to 67.2 from 78.1, and has made a dead-cross over the slow stochastic line, indicating an end of the short term up cycle and the beginning of another down cycle. Readings from the indicators showed that the FBMKLCI is going into a consolidation mode.
The broad trend of the FBMKLCI remained up. However, the immediate near term trend has turned down as the key index has closed below the 5-day SMA yesterday. Nonetheless, it is still supported by a cluster of 10, 20 and 30-day SMA at 1,870 to 1,871 and a break of the critical support at 1,870 will likely see the FBMKLCI sliding lower to the 1,860 range. As volume remained subdue, the broad market is likely to see continue weak rotational play on selected small cap and penny stocks as the big cap consolidates.
Overnight, the Dow rose 5.27 points or 0.03% to close at 16,781.01. Today, the FBM KLCI is likely to trade within a range of 1,865 to 1,880.
This week's expected range: 1845 – 1899
Today’s expected range: 1865 – 1880
Resistance: 1874, 1877 1880
Support: 1865, 1868, 1870
Stocks to watch: ABRIC, AZRB, BRIGHT, DESTINI, E&O, ELSOFT, GHLSYS, GUOCO, ILB, K1, MAGNA, MAS, PELANGI, PPHB, SCABLE, SENDAI, SKPRES, UCHITEC
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