Stocks on Bursa Malaysia closed lower yesterday due to the extended sell-off in heavyweights. Sentiment in most regional market were subdued as the latest round of US debt ceiling battle raged on in the US. Regionally, Japan's Nikkei 225 was higher by 1.22% to 14,799.12, Hong Kong's Hang Seng eased 0.36% to 23,125.03 and China's Shanghai Composite lost 1.94% to 2,155.81. The benchmark FBM KLCI fell 9.9 points or 0.55% to end at its intra-day low of 1,774.16. Losers led gainers by 404 to 327, with 297 counters unchanged. Turnover fell to 2.14 billion shares, worth RM1.87 billion, from 2.21 billion shares, worth RM2.05 billion, recorded on Wednesday.
Following the weak close on Wall Street overnight, the FBM KLCI opened 0.24 of a point higher at 1,784.30 and surged to the intra-day high of 1,784.96 within the first ten minutes after opening. The rise could not sustained, and the key index slipped on continuous selling pressure throughout the day to end at the lowest point of the day. Chart-wise, the FBM KLCI formed a bearish black candlestick which indicates sellers were dominant for the day, and the index has also closed the gap formed on September 19. Hence, the FBM KLCI is likely to continue to slip lower to test the next support zone of 1,770 to 1,763, and the immediate overhead resistance zone is at 1,784 to 1,791.
MACD has turned downward, and its histogram also contracted for the fourth bar, indicating an increased in the bearish momentum. However, as MACD is still above the signal-line, current weakness may be viewed as just a correction in an uptrend. RSI (14) slipped lower to 53.6 from 58.4, indicating the short term relative strength of the key index has turned from mildly bullish to the neutral state. Stochastic has crossed below the 80-level to 76.4, issuing a short term sell signal which indicates the index is turning weaker and the down cycle continues. Readings from the indicators showed that the FBM KLCI is weak for the short term, and the consolidation is likely to continue.
The immediate short term trend of the FBM KLCI has turned down as the key index has now closed below the 5 and 10-day SMA, and the index is likely to slip lower to test the critical support zone at 1,770 to 1,767 provided by a cluster of 15, 50, 60 and 100-day SMA. Strong support or rebound is expected when the index hit this zone, however, if the index break and close below this support zone, it is likely that the key index will plunge lower to test the psychological support level of 1,750. On the other hand, the FBMSCAP and FBMACE index is still on the uptrend. Hence, the lower liners are likely to remain at the centre stage as the heavyweight blue-chips consolidate.
Overnight, the Dow rebounded 55.04 points or +0.36% to close at 15,328.30. Today, the FBM KLCI is likely to trade within a range of 1,759 to 1,795.
This week's expected range: 1756 – 1828
Today’s expected range: 1759 – 1795
Resistance: 1781, 1788, 1795
Support: 1759, 1766, 1770
Stocks to watch: ASUPREM, BENALEC, GOB, GPACKET, HANDAL, JAKS, MMODE, SCABLE, SONA-WA, WTK