Stocks on Bursa Malaysia ended lower yesterday in tandem with regional peers after Greeks voted not to accept bailout conditions set by creditors. Ringgit Malaysia also fell to a 16 year low of 3.8056 against the US dollar, the weakest in 16 years. The Ringgit was pegged at 3.80 to a US dollar in 1998 during the Asian Financial Crisis and was unpegged in July 2005. The FBM KLCI was down 17.19 points, or 0.99%, to 1,717.05, after moving between 1,706.60 and 1,728.43 throughout the day. Losers thumped gainers by 646 to 158 with 249 counters unchanged. Total volume rose to 1.54 billion units valued at RM1.41 billion from 1.45 billion units worth RM1.39 billion on Friday.
Following the Greek referendum with a ‘No’ to the bailout conditions set by creditors, the benchmark FBM KLCI opened 5.81 points lower with a downside gap at 1,728.43, the intra-day high level, and plunged to hit the intra-day low of 1,706.60 sixteen minutes after opening, losing 27.64 points at its worst. The key index rebounded from the low and climbed higher gradually to end the day off low at the mid-range of the day. Chart-wise, the FBM KLCI formed a bearish black candlestick with a long lower shadow which is almost equivalent to the size of the candle-body, indicating the force of supply and demand was almost equal for the day. Hence, the FBM KLCI is likely to stay in range-bound consolidation today within a range of 1,706 to 1,728.
MACD was marginally higher, but its histogram contracted downward, indicating a reduction in the upward momentum or a pullback correction. RSI (14) was sharply lower at 42.1 from 48.9, indicating a strong pullback correction, and the relative strength of the FBM KLCI was at weaker end of the mildly bearish zone. Stochastic hooked downward to 79.5 from 85.5, indicating pullback correction and a possible end to the short term rebound which started on June 30th. Readings from the indicators showed that the FBM KLC is undergoing a pullback correction, and is likely to further consolidate.
The short term trend of the FBM KLCI has again turned down after turning up briefly last week as the key index has closed below the short term moving averages of 5, 10, 15, 20 and 30-day SMA, and the medium and long term trend continued to remain down. Hence, the FBM KLCI is likely to stay in range-bound consolidation within a range of 1,688 to 1,738, and a breakout on either side of this range will see the FBM KLCI continue to move in the direction of breakout.
Overnight, the Dow fell 46.53 points or -0.26% to close at 17,683.58. Today, the FBMKLCI is likely to trade within a range of 1,684 to 1,750.
This week's expected range: 1652 – 1788
Today’s expected range: 1684 – 1750
Resistance: 1728, 1739, 1750
Support: 1684, 1695, 1706
Stocks to watch: EDEN, EVERGRN, FBMKLCI-HH, FBMKLCI-HK, FBMKLCI-HM, IRCB, MCLEAN, MIECO, MINHO, MPAY, PERWAJA, SCN
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