Stocks on Bursa Malaysia closed mixed yesterday with the benchmark FBM KLCI reversing earlier gains on lack of buying momentum and late selling of DIGI and Sime Darby dragged the index into the red at the close. Key Asian markets fared worse than the FBM KLCI with losses ranging from 0.25% to 0.94%. The ringgit weakened to 3.7040 against the US dollar from the previous close of 3.6780. At close, the FBM KLCI settled at 1,789.73, down 2.01 points or 0.11% after fluctuating between 1,789.73 and 1,799.05 throughout the day. Gainers led losers by 457 to 350 with 338 counters unchanged. Total volume rose to 2.5 billion shares worth RM2.3 billion from 2.1 billion shares worth RM1.9 billion on Monday.
Taking cue from the rebound on Wall Street overnight, the FBM KLCI opened 3.08 points higher at 1,794.82 and climbed higher to the morning session high of 1,798.35 in the first twenty minutes. However, profit taking activity dragged the key index into the negative zone and was fluctuating in narrow range. The FBM KLCI breakout from consolidation in the afternoon and climbed higher to hit the intra-day high of 1,799.05 but heavy selling pressure in the last hour push the FBM KLCI to close at the lowest point of the day. Chart-wise, the FBM KLI formed a bearish black candlestick which engulfs the body of the previous day’s candlestick indicating sellers are dominant for the day and the FBM KLCI is likely to further correct downward today. Immediate downside support zone is at 1,780 to 1,770, while the overhead resistance zone is at 1,799 to 1,809.
MACD slipped lower and its histogram also extended downward, indicating an increased in the bearish momentum. RSI (14) slid lower to 43.8 from 44.7, indicating further weakening of the FBM KLCI in the mildly bearish zone. Stochastic plunged to 30.9 from 42.9, indicating the key index is turning weaker and continuation of the short term down cycle. Readings from the indicators showed that the FBM KLCI is in a correction mode and is likely to further correct downward.
The short term trend of the FBM KLCI has turned down as the key index is closing below the short term moving averages and the 5-day SMA has also made a dead-cross over the 30-day SMA, indicating further weakness is expected ahead. The medium term trend is still up while the long term trend has turned sideways. Immediate downside support zone is expected at 1,781 to 1,771 provided by the medium term 50 and 60-day SMA, and a break of the 60-day SMA is likely to see the FBM KLCI plunging lower to the critical 1,751-point support level, the mid-range support for the range measuring from 1,671 to 1,831. On the broader market, rotational play on small caps and ACE market counters is still active. However, bearish sentiment of the FBM KLCI may also affect trading sentiment of the penny stocks.
Overnight, the Dow plunged 332.78 points or -1.85% to close at 17,662.94. Today, the FBMKLCI is likely to trade within a range of 1,777 to 1,808.
This week's expected range: 1769 – 1852
Today’s expected range: 1777 – 1808
Resistance: 1795, 1802, 1808
Support: 1777, 1783, 1786
Stocks to watch: AHB, BHS, BDB, CAREPLS, ELSOFT, ESCERAM, FARMBES, GHLSYS, IJACOBS, IQGROUP, KIMLUN, MMSV, OKA, PLABS, PMETAL, PRESBHD, PW, SUNZEN, TUNEINS, VS, VSOLAR, WELLCAL
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