Stocks on Bursa Malaysia closed lower yesterday ahead of the much-anticipated US Federal Reserve policy meeting. The markets took a breather ahead of what was expected to be the first tentative step by the Federal Reserve as investors are cautiously anticipating the US central bank to cut its US$85 billion monthly asset buying. The FBM KLCI fell 3.54 points or 0.20% to 1,771.40 after hovering between 1,769.69 and 1774.78. Gainers led losers by 405 to 312, with 320 counters unchanged. Turnover fell to 1.43 billion shares worth RM1.48 billion from Tuesday's 1.5 billion shares worth RM1.74 billion.
The FBM KLCI opened 2.43 points lower at 1,772.51 and rebounded to the intra-day high of 1,774.78 within the first thirty five minutes. However, the rebound could not sustained, and the key index slipped lower to the intra-day low of 1,769.69 at noon and remained in a sideways consolidation mode till closing. Chart-wise, the FBM KLCI formed a small black spinning-top candlestick which indicates low volatility amid consolidation as the market was trading cautiously ahead of the US FOMC meeting. Hence, the FBM KLCI is likely to continue to consolidate or stage a breakout depending on the outcome of the US FOMC meeting on whether the Fed will start tapering the bond buying program immediately. Immediate overhead resistance is at 1,781 while the downside support is at 1,763.
MACD continued to rise, but is tapering off, while the histogram has contracted for the first time after expanding continuously for seven sessions, indicating a loss in the upward momentum. RSI (14) hooked downward to 58.5 from 60.4, indicating the short term relative strength has turned from bullish to mildly bullish. Stochastic hooked downward to 92.5 from 93.8, reflecting a mild loss in the key index, but the market strength is still generally strong. Readings from the indicators showed the FBM KLCI is in a consolidation mode and is likely to continue to consolidate until a breakout is seen.
The immediate short term trend of the FBM KLCI has turned sideways as the key index has been trading within a range of 1,763 to 1,781 over the last five sessions, while the short term trend is still up. The medium term trend remained sideways while the long term uptrend is still intact. Overnight, the U.S. Federal Reserve stunned markets and decided not to taper its asset-buying program, sending U.S. bond yields and the dollar into a tailspin. Hence, the Asian market is likely to see a relief rally today with the FBM KLCI likely to break above the immediate overhead resistance of 1,781 and move towards the next target level of 1,791.
Overnight, the Dow rose 147.21 points or +0.95% to close at a fresh record high of 15,676.94. Today, the FBM KLCI is likely to trade within a range of 1,764 to 1,780 with a high possibility of breaking out of this consolidation range.
This week's expected range: 1705 – 1811
Today’s expected range: 1764 – 1780
Resistance: 1774, 1777, 1780
Support: 1764, 1766, 1769
Stocks to watch: BRAHIMS, IRCB, IRCB-WA, KPS, MATRIX, MMODE, SALCON, SERSOL, SERSOL-WA, WONG, XDL