Stocks on Bursa Malaysia closed lower yesterday, dragged down by selling in selected blue-chips and heavyweights. Nonetheless, gains in small-capitalized stocks helped limit losses in the local market. The FBMKLCI was 4.33 points or 0.23% lower at 1,868.64, after moving between 1,867.34 and 1,876.83 throughout the day. Losers led gainers by 451 to 400, with 312 counters unchanged. Total volume increased to 2.4 billion units valued at RM2.14 billion, from 2.38 billion units valued at RM2.182 billion on Friday.
Taking cue from the strong rebound of the Dow last Friday, the FBMKLI opened 1.37 points higher at 1,874.34 and surged to hit the intra-day high of 1,876.83 within the first ten minutes after opening. However, the rise could not sustain, and the key index fell on heavy profit-taking to hit the intra-day low of 1,867.34 at late afternoon before rebounding slightly to close off low. Chart-wise, the FBMKLCI formed a bearish black candlestick which continues its current downtrend to close near the low of the day. Hence, the FBMKLCI is likely to further consolidate with immediate downside support at 1,860, while the overhead resistance is at the gap area of 1,877.
MACD and its histogram continued to slide southward, indicating an increased in the bearish momentum. RSI (14) slipped lower to 38.7 from 41.7, indicating the FBMKLCI has turned bearish from a mildly bearish state. Stochastic plunged to 12.8 from 28.4, entering the short term oversold zone for the first time since it came out of it on June 10. Readings from the indicators showed that the FBMKLCI is short term very weak and bearish, and hence, is likely to further consolidate.
The short and medium term trend of the FBMKLCI is down as the key index is now closing below the short and medium term moving averages, and the 5-day SMA has also crossed below the 30-day SMA, strengthening the short term down trend. Nevertheless, the long term trend is still up. The FBMKLCI is likely to slide lower to find support from the 100, 120 and 150-day SMA at 1,861, 1853 and 1,849 respectively, and a break of the 150-day SMA at 1,849 which coincides with the 1,850-point psychological support level may trigger greater selling pressure which may push the key index lower toward the 1,820 to 1,830 zone. On the broader market, rotational play on small cap and penny stocks is likely to continue as the big cap stocks corrects and consolidate.
Overnight, the Dow fell 48.45 points or -0.28% to close at 17,051.73. Today, the FBM KLCI is likely to trade within a range of 1,855 to 1,886.
This week's expected range: 1840 – 1918
Today’s expected range: 1855 – 1886
Resistance: 1874, 1880, 1886
Support: 1855, 1861, 1865
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