Stocks on Bursa Malaysia closed broadly lower yesterday with the benchmark FBMKLCI closing marginally lower, amid mixed sentiment on Asian equity markets with gains in selected consumer and finance stocks limiting losses. Investors had remained on the sidelines on concerns over the possibility of the US Federal Reserve ending its bond-buying program this month. The FBMKLCI ended 0.82 of a point or 0.05% lower at 1,796.38 points, after hovering between 1,790.99 and 1,801.81 during the day. Decliners trounced advancers by 652 to 226 while 285 counters were unchanged. Total volume increased to 2.22 billion shares worth RM2.45 billion compared with 1.74 billion shares worth RM1.8 billion on Monday.
Following a third consecutive heavy fall of the Dow overnight, the FBMKLCI opened 5.31 points lower at 1,791.89 and slipped lower to hit the intra-day low of 1,790.99 within the first five minutes after opening. The key index rebounded from the low and climbed higher gradually to hit the intra-day high of 1,801.81 at mid-afternoon. However, some last minute profit-taking activity dragged the key index back to the negative territory. Chart-wise, the FBMKLCI formed a white inverted hammer candlestick, a bottom reversal candlestick pattern which indicates the bulls were staging a fight back after being beaten down severely. Hence, the FBMKLCI may stage further rebound if the buying momentum continues into today. Immediate overhead resistance is at 1,801 to 1808 while the immediate downside support is at 1,790.
MACD and its histogram continued to slide lower, indicating further increased in the bearish momentum. RSI (14) was marginally lower at 22.6 from 22.8, indicating a reduction in the bearish strength. Stochastic was marginally lower at 3.7 from 4.7, indicating a reduction in the downward force and is deeper into the short term stochastic oversold zone. Readings from the indicators showed that the FBMKLCI is still in bearish mode but the downward momentum is reducing, and is deeply oversold, and hence, a technical rebound might be expected.
The technical picture of the FBMKLCI remained very much unchanged in that the trend is still down and bearish. However, the price action of the key index yesterday showed that the long term bulls have come in to bargain hunt at current level, and hence, the FBMKLCI may stage further rebound if the buying momentum continues. From the peak of 1,896.23 registered on July 8th 2014 to the low of 1790.99 yesterday, the FBMKLCI has corrected as much as 105.24 points. The more recent correction in July 2013 saw a correction of 151 points while the correction in January 2014 saw 112 points losses and both correction took five to six weeks to complete. The current correction on FBMKLCI which started on July 8th is now more than three months and is likely to drag on for a while until some concrete trend reversal signs are seen.
Overnight, the Dow fell a marginal 5.88 points or -0.04% to close at 16,315.19. Today, the FBM KLCI is likely to trade within a range of 1,780 to 1,812.
This week's expected range: 1753 – 1890
Today’s expected range: 1780 – 1812
Resistance: 1801, 1807, 1812
Support: 1780, 1785, 1790
Stocks to watch: BSTEAD, GHLSYS, IFCAMSC, KINSTEL, OCNCASH, MUHIBAH, NIHSIN, PMHLDG, SUCCESS
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