Stocks on Bursa Malaysia ended mixed yesterday as the benchmark FBM KLCI continued to head south to close 9.32 points or 0.62% lower at 1,504.22 on the second trading day of 2012, after touching an intra-day high of 1,525.14. Losers outnumbered gainers by 404 to 387, while 318 counters were unchanged. Turnover was slightly higher at 1.658 billion shares worth RM1.527 billion compared with 1.604 billion shares valued at RM1.406 billion on Tuesday.

Taking cue from the strong gain on Wall Street overnight, the FBM KLCI opened 3.62 points higher at 1,517.69 and surged to the intra-day high of 1,525.14 within the first six minutes of trading, and profit-taking immediately set in which pushed the key index lower for the rest of the day to hit the intra-day low of 1,502.09 before rebounding slightly to close at 1,504.22. Chart wise, the FBM KLCI formed a bearish black candlestick which indicates the bears were fully in control for the day, and the key index may continue to consolidate today. The bearish down move yesterday was anticipated as mentioned in yesterday’s analysis, and is a confirmation to the bearish Harami pattern formed on Tuesday. The key index has now moved into the confine of the support zone of 1,500 to 1,506, and the immediate key support level is the 1,500-point psychological support level. 

MACD has hooked downward slightly, and together with a shorter histogram it indicates a slow down in the upward momentum due to the correction over the last two sessions. RSI (14) continued to slide lower to 57.9, indicating the relative strength of the key index has turned mildly bullish from bullish a day earlier. Stochastic continued to slide lower to 82.3, reflecting the correction and indicating possible further consolidation in the key index. Readings from the indicators showed that the FBM KLCI has entered a short term correction phase after the recent rally.

The FBM KLCI has closed below the 5-day SMA, indicating the key index has gone into a short term correction mode. Nevertheless, the overall trend of the FBM KLCI remained up. Immediate overhead resistance zone is at 1,511 to 1,530 while the downside support zone is at 1,502 to 1,490 with the 10-day SMA providing support at 1,497-point level. Judging from the volume and value transacted, the overall market is likely to be still dominated by the second and third liners while the blue-chips counters consolidate themselves. 

Overnight, the Dow rose +21.04 points or +0.17% to close at 12,418.42. Today, the FBM KLCI is likely to trade within a range of 1,472 to 1,548.

This week's expected range: 1463 – 1571

Today’s expected range: 1472 – 1548

Resistance: 1519, 1534, 1548

Support: 1472, 1487, 1495