Stocks on Bursa Malaysia closed lower yesterday as investors reduced their holdings in selected heavyweights and penny stocks. Losses were mostly seen in Petronas Chemicals and Tenaga which dragged down the FBM KLCI by 0.38 point or 0.03% to close at 1,476.84. Decliners led advancers by 462 to 323 while 285 counters were unchanged. Turnover eased to 2.03 billion shares worth RM1.47 billion from 2.98 billion shares worth RM1.55 billion on Tuesday.

The FBM KLCI opened with an up gap of 3.94 points higher at 1,481.16 and surged to intra-day high of 1,487.37 within the first half an hour of trading, and heavy profit-taking which appeared pushed the key index to the intra-day low of 1,470.09 before rebounding to close marginally lower. Chart-wise, the FBM KLCI formed a high wave black spinning-top candlestick which indicates indecision of market direction with a bearish bias. The trading range of the key index has increased to 17 points yesterday, indicating high volatility, but still remained within the sideways range of the last two weeks. Immediate downside support zone is at 1,470 to 1,452, while the upside resistance zone is at 1,488 to 1,493.

MACD continued to slide lower after making a dead-cross yesterday, indicating a continued loss in momentum and entering into an extended consolidation phase. RSI (14) was marginally lower at 56.8, indicating the key index is still mildly bullish. Stochastic slid lower to 64.2, indicating a continuation of the down cycle and loss in market strength or momentum. Readings from the indicators showed that the FBM KLCI is currently undergoing a sideways consolidation and the phase is likely to extend until clear signs of breakout is observed.

The immediate short term trend of the FBM KLCI is sideways range-bound with the upper boundary at 1,493 while the lower boundary is at 1,452. An immediate support provided by the 20-day MA at 1,467 is critical, as a close of the FBM KLCI below this level is likely to see the key index plunging further to the next lower support at 1,449 provided by the 30-day MA. The FBM KLCI is likely to continue its sideways consolidation with a downward bias, and rotational play on the third liners is also likely to continue. 

Overnight, the Dow fell -190.5 points or -1.58% to close at 11,905.59. Today, the FBM KLCI is likely to trade within a range of 1,451 to 1,505.

This week's expected range: 1435 – 1516

Today’s expected range: 1451 – 1505

Resistance: 1487, 1496, 1505

Support: 1451, 1460, 1468