Stocks on Bursa Malaysia closed mixed yesterday on mild profit-taking ahead of the long Chinese New Year weekend. However, losses were limited amid investor interest in smaller cap stocks. The market was supported by improved risk appetite after the International Monetary Fund said it was planning a large expansion in its lending pool to safeguard the global economy against the worsening Euro-zone debt crisis. The FBM KLCI ended 0.57 point lower at 1,516.81 after opening 1.58 point lower at 1,515.80. Gainers led losers by 378 to 370 while 325 were unchanged. Turnover increased to 1.936 billion shares valued at RM1.618 billion as compared with Wednesday’s 1.490 billion shares worth RM1.599 billion.

The FBM KLCI opened 1.58 point lower at 1,515.80 but surged to the intra-day high of 1,522.32 in the first fifteen minutes of trade. However, profit-taking activity which surfaced pressed the key index southward for the rest of the day to hit the intra-day low of 1,514.04 before rebounding to close almost unchanged. Chart wise, the FBM KLCI formed a white inverted hammer candlestick which indicates the bulls were initially trying to take control but the bears later came out to press the index back to where it started. Hence, the FBM KLCI is likely to extend its range-bound consolidation but with an upward bias.

MACD continued to slide lower, indicating a continued loss in the index’s momentum. However, as MACD is still above the zero-line, the current weakness is view as a short term consolidation. RSI (14) was marginally lower at 57.5, reflecting the mild loss in the index and showed that the key index is still in the mildly bullish zone. Stochastic, however, has hooked upward to 60.3, showing sign that a possible rebound may take place. Readings from the indicators showed that the FBM KLCI is currently undergoing a short term consolidation process.

The immediate short term trend of the FBM KLCI has turned into sideways range-bound as it is capped on top by the 5 and 10-day SMA but was supported below by the 20 and 30-day SMA, but the longer term trend still remained up. Immediate overhead resistance zone is at 1,522 to 1,530 while the downside support zone is at 1,509 to 1,501. A breakout is either one direction will see the FBM KLCI continue moving in that direction.As Bursa Malaysia is close for the Chinese New Year holiday on next Monday and Tuesday, the overall market is likely to remain as it is, and we like to take this opportunity to wish all our readers “Gong Xi Fa Cai” and may the year of the Dragon brings you and your family good health, happiness and prosperity. 

Overnight, the Dow rose +46.24 points or +0.37% to close at 12,625.19. Today, the FBM KLCI is likely to trade within a range of 1,504 to 1,531.

This week's expected range: 1502 – 1540

Today’s expected range: 1504 – 1531

Resistance: 1521, 1526, 1531

Support: 1504, 1509, 1513

Stocks to watch: UNISEM, MPI, DKSH