Stocks on Bursa Malaysia closed broadly lower yesterday with losses in most heavyweights dragged down the FBM KLCI into the red. Elsewhere in the region, market breadth was healthy with Hong Kong's Hang Seng climbed 443.97 points to 22,175.34, Japan's Nikkei rose 184.06 points to 13,572.92 and Singapore's Straits Times Index went up 24.37 points to 3,053.31. The FBM KLCI declined 10.02 points or 0.58% to close at 1,717.56, with the key index moving between 1,714.95 and 1,723.77 throughout the day after opening 3.81 points weaker at 1,723.77. Losers trounced gainers by 523 to 231, with 242 counters unchanged. Turnover stood at 1.08 billion shares worth RM1.2 billion against 1.60 billion shares worth RM2.48 billion on Friday.
Taking cue from the mild loss of the Dow last Friday, the FBM KLCI opened 3.81 points lower at 1,723.77 and slipped lower to the intra-day low of 1,714.95 at late morning. The key index rebounded slightly from the low and moved sideways for the rest of the day. Chart-wise, the FBM KLCI formed a bearish Harami candlestick pattern, a potential top reversal candlestick pattern which indicates a changed in sentiment from bullish to bearish, and hence, the FBM KLCI might further correct downward or consolidate itself. Immediate downside support is at 1,715 to 1,708 while the immediate overhead resistance zone is at 1,724 to 1,732.
MACD was marginally higher and its histogram also contracted upward for the third bar, indicating a reduction in the bearish momentum. RSI (14) hooked downward to 38.1 from 40.9, reflecting the pullback in the key index and the short term relative strength is still bearish. Stochastic was higher at 39.7 from 32.3, indicating an improvement in the market strength and continuation of the short term up cycle. Mixed readings from the indicators showed that the FBM KLCI is in a state of consolidation.
The short and medium trend of the FBM KLCI remained down and bearish. Nevertheless, the long term trend is still up as the key index continued to stay above the 200 to 360-day SMA. As of now, the 200-day SMA is at 1,702, and a further break of this long term moving average will trigger another round of selling pressure which will see a re-test of the critical support at 1,660. On the flip side, in order to reverse the current down trend, the FBM KLCI must at least close above 1,740-point level, the gap area formed on August 22, which coincided with the 120-day SMA. As of now, the Bursa market is likely to go into a consolidation mode while waiting for clearer external direction.
Overnight, the US market was closed for Labor Day holiday. Over in Europe, the DAX rose +140.72 points or +1.74% to close at 8,243.87. Today, the FBM KLCI is likely to trade within a range of 1,703 to 1,734.
This week's expected range: 1634 – 1778
Today’s expected range: 1703 – 1734
Resistance: 1723, 1728, 1734
Support: 1703, 1709, 1713