Stocks on Bursa Malaysia ended on an easier note yesterday depressed by the Industrial Production Index (IPI) for July 2014. The IPI grew by 0.5% in July 2014 compared with the same month last year, contributed by the growth in the manufacturing and electricity indices, but was below market expectation as it grew slower than June's output growth of seven percent. The FBMKLCI fell 4.74 points or 0.25% to close at 1,866.11, after rising to a session's high of 1,874.67 earlier in the day. Losers outpaced gainers by 430 to 412, with 326 counters unchanged. Total volume fell to 2.04 billion shares worth RM1.92 billion from 2.18 billion shares worth RM2.01 billion on Wednesday.
Taking cue from the rebound on Wall Street overnight, the FBMKLCI opened 2.81 points higher at 1,873.66 and surged to hit the intra-day high of 1,874.67 briefly after opening. However, the rise found no follow through and the key index fell on heavy profit-taking for the rest of the day to close at the lowest point of the day. Chart-wise, the FBMKLCI formed a bearish engulfing candlestick pattern which indicates heavy selling pressure and the bears had taken of the market control for the day. Hence, the FBMKLCI is likely to slide lower today on follow through selling as traders clear positions ahead of the weekend. Immediate downside support zone is at 1,865 to 1,860, while the overhead resistance zone is at 1,874 to 1,879.
MACD turned downward and crossed below the zero-line, and its histogram also further contracted downward, indicating the end of the technical rebound which started on September 3rd, and the possible beginning of another bearish downward move. RSI (14) was lower at 47.4 from 51.2, indicating the short term relative strength of the FBMKLCI has again turned mildly bearish. Stochastic hooked downward to 64.8 from 71.2 and crossed below the slow stochastic line, issuing a stochastic sell signal, and indicating the end of the short term up cycle. Readings from the indicators showed that the FBMKLCI has again turned bearish, and hence, is likely to further consolidates.
The short term trend of the FBMKLCI remained sideways range-bound, and the bearish move of the key index yesterday signals more downside is expected today. Nevertheless, the FBMKLCI is likely to continue to fluctuate within its short term sideways range of 1,853 to 1,879 and a breakout of this range will signify a bigger move is expected. The medium term trend of the FBMKLCI also remains sideways range-bound within a larger range of 1,837 to 1,896, while the long term uptrend is still intact. On the broader market, rotational play of small caps and penny stocks is still alive. However, momentum has greatly reduced as can be seen from the dwindling volume.
Overnight, the Dow fell 19.71 points or -0.12% to close at 17,049.00. Today, the FBM KLCI is likely to trade within a range of 1,854 to 1,883.
This week's expected range: 1838 – 1891
Today’s expected range: 1854 – 1883
Resistance: 1871, 1877, 1883
Support: 1854, 1860, 1863
Stocks to watch: AIRASIA, ANNJOO, BJAUTO, CENSOF, CME, DNEX, FARMBES, FUTUTEC, JAKS, KINSTEL, KTB, KPS, LATITUD, MIKROMB, MYCRON, TDEX, UCHITEC, WPRTS
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