Stocks on Bursa Malaysia closed broadly lower yesterday on lack of catalysts and buying momentum. At close, the benchmark FBMKLCI rose 1.58 points or 0.08% to 1,867.69 after moving between 1,860.67 and 1,868.82 throughout the day. Market breadth was negative with losers trouncing gainers by 526 to 339 while 297 counters remain unchanged. Total volume fell to 2.802 billion shares worth RM2.157 billion against 3.22 billion shares worth RM2.85 billion on last Friday.
The FBMKLCI opened 0.65 of a point lower at 1,865.46 and slipped lower to hit the intra-day low of 1,860.67 within the first thirty minutes after opening. The key index rebounded from the low and climbed higher gradually to hit the intra-day high of 1,868.82 at noon, but pulled back on profit-taking activity in the afternoon session, and a last minute buying effort managed to push the index to close near the high. Chart-wise, the FBMKLCI formed a white hammer candlestick; a bullish bottom reversal candlestick pattern which indicates the bulls or buyers has entered the market in sufficient numbers to reverse the earlier downtrend, and also the waning of selling pressure. Hence, the FBMKLCI is likely to stage further rebound if the buying support continues into today. Immediate downside support is at 1,860, while the immediate overhead resistance is at 1,879.
MACD turned upward marginally, while its histogram continued to contract, indicating a state of consolidation. RSI (14) hooked upward slightly to 49 from 48, indicating a mild rebound, and the short term relative strength is still in the mildly bearish state. Stochastic, however, hooked downward to 71.7 from 79.4, and has crossed below the slow stochastic line, indicating a lost in momentum and a stochastic sell signal. Mixed readings from the indicators showed that the FBMKLCI is going into a state of consolidation.
The short term trend of the FBMKLCI has turned sideways as the key index is now closing below the 5, 10 and 30-day simple moving average (SMA) but was support below by the 15, 20 and 120-day SMA. Hence, the FBMKLCI is likely to move sideways range-bound in the near term within a range of 1,859 to 1,879 until a breakout is seen on either side of the range. The medium term trend is also sideways as the 50 and 60-day SMA has turned flat. Nevertheless, the long term trend is still up. On the broader market, rotational play on small caps and penny stocks has slowed down as can be seen from the reducing volume. However, a different group of stocks is in play while the earlier ones goes into correction and consolidation.
Overnight, the Dow fell 30.89 points or -0.18% to close at 17,067.56. Today, the FBM KLCI is likely to trade within a range of 1,854 to 1,877.
This week's expected range: 1837 – 1899
Today’s expected range: 1854 – 1877
Resistance: 1870, 1873, 1877
Support: 1854, 1857, 1862
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