Stocks on Bursa Malaysia closed broadly lower yesterday with the benchmark FBM KLCI closing weaker, dragged by fund selling of Petronas related stocks, Public Bank and Telekom Malaysia on continuous selling activities in heavyweights. The weaker market sentiment was prompted by renewed expectations that the US Federal Reserve would increase its interest rate sooner-than-expected following strong US jobs report released last Friday. The FBM KLCI ended 15.22 points lower at 1,791.74, after fluctuating between 1,778.99 and 1,797.99 throughout the day. Losers outpaced gainers by 544 to 274 with 291 counters unchanged. Total volume rose to 2.1 billion shares worth RM1.9 billion from 2 billion shares worth RM1.9 billion last Friday.
Taking cue from the weak performance of Wall Street last Friday, the FBM KLCI opened 16.37 points lower with a downside runaway gap at 1,790.59 and slipped lower to hit the intra-day low of 1,778.99 forty five minutes after opening. The key index rebounded from the low and climbed higher gradually to touch the intra-day high of 1,795.76 before a last minute profit-taking which pulled the index to close off high. Chart-wise, the FBM KLCI formed a white hammer-like candlestick, a bottom reversal candlestick pattern which indicates the bears were initially in control but the bulls fought back later to regain control. However, as the body size is small, it also showed consolidation. Hence, the FBM KLCI is likely to further consolidate but with an upward bias. Immediate overhead resistance zone is at 1,795 to 1,800, while the immediate downside support zone is at 1,779 to 1,770.
MACD continued to slide lower, and its histogram also extended downward, indicating an increased in the bearish downward momentum. RSI (14) fell to 44.7 from 52.5, indicating the short term relative strength of the FBM KLCI has turned mildly bearish from a mildly bullish state. Stochastic slid lower to 42.9 from 68.9, indicating further weakening of the key index and continuation of the short term down cycle. Readings from the indicators showed that the FBM KLCI has turned bearish for the short term, and hence, is likely to further consolidate.
The short term trend of the FBM KLCI has turned down or bearish as the key index is now closing below the cluster of 5, 10, 15, 20, and 30-day simple moving average (SMA). Nonetheless, the FBM KLCI rebounded from the medium term 50-day SMA, indicating there were buying support from the medium term. With the bearish down move yesterday, the FBM KLCI has also closed below the 120-day SMA but rebounded to close above the 100-day SMA after piercing through it. Hence, the FBM KLCI is likely to further consolidate for the short term. Critical support is at 1,751, the mid-range for the recent uptrend calculating from the pivot low of 1,671 to the pivot high of 1,831, and a break of this critical support will see the market turning more bearish and the FBM KLCI going into a prolonged consolidation. On the broader market, small caps and the ACE market counters are showing resilience, and rotational play will continue to support the market.
Overnight, the Dow rebounded 138.94 points or 0.78% to close at 17,995.72. Today, the FBMKLCI is likely to trade within a range of 1,765 to 1,812.
This week's expected range: 1769 – 1852
Today’s expected range: 1765 – 1812
Resistance: 1798, 1805, 1812
Support: 1765, 1772, 1781
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