Stocks on Bursa Malaysia closed mostly lower yesterday as sentiment remained cautious on renewed fears of a global recession. The concern follows the delay in resolving the Euro-zone debt crisis and a heavy US budget deficit. However, bargain-hunting in selected heavyweights helped push the FBM KLCI into positive territory, closing 3.91 points or higher at 1,437.99. Decliners led advancers 398 to 327, while 298 counters were unchanged. Volume was lower at 1.27 billion shares worth RM1.04 billion from 1.42 billion shares worth RM1.16 billion on Monday.
Taking cue from the almost 250 points dropped of the Dow, the FBM KLCI opened with a down gap of 3.28 points at 1,430.80 and plunged to the intra-day low of 1,425.47 in the first hour of trade. However, bargain-hunting on selected blue-chips lifted the key index off low to close near the intra-day high level. Chart-wise, the FBM KLCI formed a white piercing-line candlestick, which is a bottom reversal candle pattern. However, as the candlestick could not pierce above the mid-point of the previous day’s candlestick at 1,443.03, the rebound yesterday was considered a weak one. Nonetheless, the FBM KLCI might continue moving higher today with a follow through rebound, and the immediate overhead resistance is at 1,443-point level, follow by the psychological resistance level at 1,450.
MACD continued to slide lower, indicating an increased in the downward momentum. Nevertheless, it is still above the zero-line, and the current weakness is just part of a short term correction. RSI (14) has hooked up slightly to 42.8, reflecting the weak rebound, and indicated that the relative strength of the key index is still mildly bearish. Stochastic was at 8.8, has fell deeper into the short term oversold zone, indicating a possible rebound might be expected ahead. Readings from the indicators showed that the FBM KLCI is currently undergoing a correction or consolidation process, and this is likely to continue until there is confluence of reversal signals from the indicators.
The trend of the FBM KLCI remained down and bearish as the key index continue to stay below the short, medium and long term moving averages. Immediate downside support zone is envisaged at 1,425 to 1,400, while the immediate upside resistance zone is at 1,443 to 1,452. With the gross volume continued to shrink, the current consolidation process is likely to extend.
Overnight, the Dow fell -53.59 points or -0.46% to close at 11,493.72. Today, the FBM KLCI is likely to trade within a range of 1,416 to 1,452.
This week's expected range: 1410 – 1520
Today’s expected range: 1416 – 1452
Resistance: 1443, 1447, 1452
Support: 1416, 1420, 1429
Stocks to watch: HIBISCS, HIBISCS-WA, JCY