Stocks on Bursa Malaysia closed mostly lower yesterday on profit-taking, particularly on the 30 counters of the key index. Nonetheless, most of the selling pressures were well-absorbed by the market which has already expected a consolidation in line with regional peers. The FBM KLCI declined 8.58 points, or 0.6%, to close at 1,462.37 after opening 0.92 point higher at 1,471.87. Losers led gainers by 524 to 226 while 273 counters were unchanged. Turnover rose to 1.75 billion shares worth RM1.14 billion compared with 1.56 billion shares worth RM1.7 billion on Wednesday. 

The FBM KLCI opened 0.92 point higher at 1,471.87 and surged to the intra-day high of 1,473.45, but profit-taking activity which emerged pushed the key index lower to the intra-day low of 1,452.64 before late hour bargain hunting lifted it to close off low. Chart-wise, the FBM KLCI formed a bearish black candlestick with long lower shadow, and it covered the body of the previous candle. This formation indicates the selling pressure was strong but buying support managed to lift the key index to almost the mid range for the day, and is closing above previous day’s low after breaching it, indicating the selling pressure was quite well absorbed. The FBM KLCI is likely to stay range-bound today with immediate overhead resistance at 1,473 and the downside support at 1,452. 

MACD continued to slide lower and the histogram was also shorter, indicating a continued loss in momentum. Nonetheless, as the MACD is still above the signal-line as well as above the zero-line, current weakness is viewed as a correction to the recent uptrend. RSI (14) slide lower to 55.4, indicating a continued loss in the relative strength and the key index is sliding further downward into the mildly bullish zone. Stochastic continued to slide lower to 80.6, indicating a continuation of the market weakness and down cycle. Readings from the indicators showed that the FBM KLCI is currently undergoing a correction and may continue to consolidate.

The short and medium term trend of the FBM KLCI remained up, while the long term trend is still bearish. However, for the immediate term the key index may go into range-bound consolidation as it is now below the 5 and 10-day moving averages (MA) but is still above the 20 and 30-day MAs. Immediate strong overhead resistance zone is at 1,473 to 1,476 while the downside support zone is at 1,452 to 1,448. Overnight, the Dow rose +208.43 points or +1.76% to close at 12,044.47. Today, the FBM KLCI is likely to trade within a range of 1,431 to 1,494.

This week's expected range: 1432 – 1529

Today’s expected range: 1431 – 1494

Resistance: 1473, 1484, 1494

Support: 1431, 1442, 1452