Stocks on Bursa Malaysia closed lower yesterday and last-minute selling in selected blue-chips and small-capitalisation counters caused the benchmark FBM KLCI to close lower. The local bourse fell 10 minutes before trading ended as profit taking emerged to curb gains and ahead of the two-day U.S. Federal Open Market Committee meeting, which begins today. The FBM KLCI, which had hovered in the positive territory earlier, ended at 1,780.54, down 1.21 points or 0.07% after fluctuating between 1,774.30 and 1,787.29 throughout the day. Losers outpaced gainers by 504 to 294 with 303 counters unchanged. Total volume was slightly higher at 2.5 billion shares worth RM1.9 billion from 3 billion shares worth RM1.8 billion last Friday.
Following the weak performance of Wall Street last Friday, the FBM KLCI opened 4.47 points lower at 1,777.28 and slipped lower to hit the intra-day low of 1,774.30 thirty minutes after opening. The FBM KLCI rebounded from the low and climbed higher to stay in the positive territory for a major part of the day. Nonetheless, a last minute selling on selected blue-chips dragged the key index into the negative territory. Chart-wise, the FBM KLCI formed a white inverted hammer candlestick, a bottom reversal candlestick pattern which indicates consolidation and possible reversal to the upside. Hence, the FBM KLCI is likely to further consolidate but with an upward bias. Immediate overhead resistance zone is at 1,787 to 1,800, while the downside support zone is at 1,774 to 1,770.
MACD continued to slide lower but its histogram contracted upward slightly and was almost flat for the last four bars, indicating a state of consolidation. RSI (14) was marginally lower at 41.2 from 41.7, indicating mild loss of the index’s relative strength, and the FBM KLCI is in a mildly bearish state. Stochastic hooked upward to 16.2 from 14.3, indicating a technical rebound is in sight after hitting the oversold zone. Readings from the indicators showed that the FBM KLCI is in a state of consolidation with a possibility of rebound after hitting the stochastic oversold zone.
The short term trend of the FBM KLCI still remained down as the key index continued to stay below the short term moving averages. The medium term trend is turning sideways as the index is trapped within the 50 and 60-day simple moving average (SMA) range. The long term trend continues to stay sideways as the long term moving averages are turning flat with a downward bias as the key index is staying below the cluster of 100 to 360-day SMA but is still above the much longer term 600 to 1000-day SMA. On the broader market, rotational play of the small caps and ACE market counters is likely to keep the market alive.
Overnight, the Dow rose 288.11 points or 1.29% to close at 17,977.42. Today, the FBMKLCI is likely to trade within a range of 1,761 to 1,800.
This week's expected range: 1747 – 1823
Today’s expected range: 1761 – 1800
Resistance: 1787, 1793, 1800
Support: 1761, 1767, 1774
Stocks to watch: BOILERM, CAP, CNOUHUA, DBHD, FLBHD, FUTUTEC, GESHEN, IJACOBS, IRETEX, MULPHA, MYEG, SENDAI, SGB, TEOSENG, WINTONI
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