Stocks on Bursa Malaysia ended lower Tuesday on selling pressure ahead of the Deepavali holiday on Wednesday. The market also turned weak compared with that of Monday, in sync with regional peers after China reported its weakest economic growth in five years, where the world’s second largest economy grew 7.3% between July and September from a year earlier, slowing from the 7.5% in the second quarter. The benchmark FBMKLCI finished 6.92 points or 0.38% lower at 1,796.22, after opening slightly better at 1,803.82 and moved between 1,794.66 and 1,804.83 throughout the day. Losers outpaced gainers by 463 to 306, while 294 counters were unchanged. Total volume declined to 1.24 billion shares valued at RM1.38 billion from Monday’s 2.05 billion shares worth RM2.21 billion.
Tracking the bullish performance of Wall Street overnight, the FBMKLCI opened Tuesday 0.68 of a point higher at 1,803.82 and surged to the hit the intra-day high of 1,804.83 briefly after opening. However, the upward move could not sustain and the key index slipped lower on heavy selling pressure to hit the intra-day low of 1,794.66 at mid-afternoon, but rebounded on bargain hunting to close off low. Chart-wise, the FBMKLCI formed a bearish dark-cloud cover candlestick pattern which indicates heavy profit-taking activity after two consecutive sessions of strong rebound and ahead of a holiday break. Hence, the FBMKLCI is likely to further correct downward if the profit-taking activity continues into today. Immediate downside support zone is at 1,794 to 1,785, while the overhead resistance zone is at 1,800 to 1,804.
MACD rose marginally but is still below the signal-line, while its histogram further contracted upward, indicating further reduction in the bearish momentum. RSI (14) hooked downward to 37.7 from 40.1, indicating a mild pullback correction. Stochastic was higher at 34.3 from 22.5, indicating further improvement in the index’s strength and continuation of the short term up cycle. Readings from the indicators showed that the FBMKLCI was facing mild profit-taking correction after a strong technical rebound.
The general trend of the FBMKLCI is still down and bearish. However, the immediate near term trend showed early sign of reversal as the key index continued to stay above the very short term 5-day simple moving average (SMA). Nonetheless, it is still too early to call for a trend reversal yet as the key index continued to stay below most of the short, medium and long term moving averages, and that a “death-cross” was spotted last Thursday, 16-10-2014, with the medium term 50-day SMA crossing below the long term 200-day SMA. A break of the 5-day SMA support which is currently at 1,788 will see a resumption of the downtrend, while a break of the immediate overhead resistance at 1,804 will see a continuation of the recent rebound.
Overnight, the Dow fell 153.49 points or -0.92% to close at 16,461.32. Today, the FBM KLCI is likely to trade within a range of 1,782 to 1,815.
This week's expected range: 1723 – 1851
Today’s expected range: 1782 – 1815
Resistance: 1802, 1808, 1815
Support: 1782, 1788, 1792
Stocks to watch: BJTOTO, HAPSENG, IFCAMSC, JIANKUN, KOSSAN, MAGNUM, MEGB, MUDAJYA, OVERSEA, PRLEXUS, SBCCORP, TROP, WEIDA, YEELEE
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