Stocks on Bursa Malaysia closed on easier note yesterday on lack of follow-through buying amid selling on selected heavyweights. The local bourse failed to take cue from the stronger regional markets as traders booked profits from last week’s gains. The benchmark FBM KLCI closed 7.8 points or 0.43% lower at 1,795.85 after moving between 1,795.85 and 1,811.08 throughout the day. Losers outpaced gainers by 436 to 374 with 311 counters unchanged. Total volume increased to 2.13 billion shares worth RM1.77 billion from 2.12 billion shares worth RM3.14 billion on Friday.
Despite the strong gain on Wall Street last Friday, the FBM KLCI opened 2.42 points lower at 1,801.23 and slipped lower to hit the morning session low of 1,797.09 fifteen minutes after opening. The key index rebounded strongly in the next thirty minutes to touch the intra-day high of 1,811.08. However, the rebound lacked follow through and the key index slipped lower for the rest of the day to end at the lowest point of the day at 1,795.85. Chart-wise, the FBM KLCI formed a bearish black shooting-star candlestick, a top reversal candlestick pattern which confirmed the Doji Harami reversal pattern formed last Friday. Hence, the FBM KLCI is likely to further correct downward or consolidate today. Immediate downside support zone is at 1,790 to 1,774, while the overhead resistance zone is at 1,800 to 1,811.
MACD turned downward slightly, while its histogram contracted upward marginally, indicating a state of consolidation. RSI (14) slipped lower to 49.4 from 53.5, indicating further loss in the key index’s relative strength to the mildly bearish zone from a mildly bullish state. Stochastic hooked downward slightly to 55.2 from 56.3, indicating a mild pullback correction. Readings from the indicators showed that the FBM KLCI is undergoing a pullback correction after the recent rise.
With the pullback yesterday, the FBM KLCI has closed below the 5, 15 and 20-day simple moving average (SMA) but is still staying above the 10-day SMA which is currently at 1,791, indicating the recent uptrend has come to an end, and the FBM KLCI is likely to go into consolidation with the downside support zone at 1,791 to 1,782 provided by a cluster of short, medium and long term moving averages. The medium term trend is still up, while the long term trend still remained sideways range-bound. On the broader market, rotational play on small caps and ACE market counters is likely to keep the market alive while the big cap stocks consolidate.
Overnight, the Dow fell 11.61 points or -0.06% to close at 18,116.04. Today, the FBMKLCI is likely to trade within a range of 1,775 to 1,826.
This week's expected range: 1738 – 1857
Today’s expected range: 1725 – 1826
Resistance: 1806, 1816, 1826
Support: 1775, 1785, 1790
Stocks to watch: APFT, AWC, BONIA, CAP, CNOUHUA, ECS, EG, ENCORP, ETITECH, FLBHD, HUNZPTY, JADI, LONBISC, MITRA, MULPHAL, MYEG, NTPM, PRIVA, RUBEREX, SUNWAY, TOPGLOV
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