Stocks on Bursa Malaysia ended yesterday on a softer note as weaker sentiment globally eased investors' confidence, resulting in selling across the board. The FBM KLCI, which opened 5.07 points lower at 1,445.18, fell as low as 1,429.38 and closed 9.07 points or 0.63% lower at 1,441.18. Losers outnumbered gainers by 500 to 232 while 226 counters were unchanged. Total market volume dwindled to 1.309 billion shares worth RM1.155 billion from Wednesday’s close of 1.691 billion shares worth RM1.212 billion.

The FBM KLCI opened 5.07 points lower at 1,445.50 and slid to the intra-day low of 1,429.38, losing 20.87 points at its worst, but rebounded in the last hour to recover some lost ground to end at 1,441.18. Chart-wise, the FBM KLCI formed a black hammer candlestick, a bottom reversal candle pattern, which indicates sellers were initially aggressive in pushing down the key index but later buyers surfaced to bargain hunt and lifted up the index. Today, the FBM KLCI may stage a follow through rebound to move higher. However, the 5-day moving average (MA) at 1,448 may post as a resistance to the up move. 

MACD has curved down slightly, and the histogram continued to turn shorter, indicating a continued loss in the upward momentum. However, as the MACD line is still above the zero-line, the broader picture is still mildly bullish, and the current weakness may just be a pullback after a rally. RSI (14) has hooked downward to 54.6 from 57.4, reflecting the correction, and the short term relative strength of the FBM KLCI is still mildly bullish. Stochastic continued to slide lower to 80.6, indicating a continuation of the down cycle or short term correction. Readings from the indicators showed that the FBM KLCI is undergoing a short term correction after the recent rally, but for the short term it is still mildly bullish.

The short term trend of the FBM KLCI remained up, even though is has closed below the 5-day MA, but is still above the 10, 20 and 30-day MAs. The key index had tested the support of the 10-day MA and rebounded off it, and it is now closing below the 5-day MA. Hence, for the immediate short term, the key index may move sideways range-bound with immediate overhead resistance at 1,448 posted by the 5-day MA and downside support at 1,432 provided by the 10-day MA. The long term outlook remained bearish for the time being until the key index is able to break above the 1,500-point level. 

Overnight, the Dow rose +37.16 points or +0.32% to close at 11,541.78. Today, the FBM KLCI is likely to trade within a range of 1,415 to 1,462. 

This week's expected range: 1371 – 1504

Today’s expected range: 1415 – 1462

Resistance: 1448, 1455, 1462

Support: 1415, 1422, 1431

Stocks to watch: LATEXX, SUPERMX, UOADEV