Stocks on Bursa Malaysia ended broadly lower yesterday but the market barometer, the FBM KLCI, closed steady indicating the market’s undertone was still intact. The market was undergoing a temporary pullback after the recent gains. Moody’s downgrade of six countries in the Euro-zone and its warning to downgrade top-rated countries also affected investor sentiment globally. The FBM KLCI ended the day at 1,566.05, up 3.23 points, or 0.21%, aided by blue-chips which remained strong. Market breadth was bearish with 58l losers and 321 gainers, 288 were unchanged. Trading volume was lower at 2.546 billion shares, worth RM2.258 billion, compared with Monday’s 2.661 billion shares worth RM2.119 billion.
The FBM KLCI opened with an up gap of 2.43 points at 1,565.25 and slipped to the intra-day low of 1,560.83 in early morning trade. The key index then rebounded and moved gradually higher to touch the intra-day high of 1,566.12 at late afternoon before pulling back slightly to close off high. Chart wise, the FBM KLCI formed a white hanging-man candlestick, a top reversal candlestick pattern, which indicates selling pressure was strong in early part of the day but buyers later surfaced to lift up the key index. Hence, the FBM KLCI may take a pause at this level to consolidate itself before moving higher. Immediate overhead resistance is at 1,567-point level.
MACD was higher but its histogram has turned shorter, indicating a reduction in the upward momentum. RSI (14) was higher at 72.2, indicating the short term relative strength of the key index is still in the very bullish zone. Stochastic, however, continued to slide lower to 96.3, indicating the market strength is reducing. Readings from the indicators showed that the upward momentum of the FBM KLCI has reduced, and is poised to head for a correction soon.
The underlying trend of the FBM KLCI remained up as the benchmark index continued to stay above the short, medium and long term moving averages. Immediate strong overhead resistance zone is at 1,567 to 1,577 while the immediate downside support zone is at 1,560 to 1,558. A breakout in either one direction will see the FBM KLCI continue moving in that direction. Judging from the dwindling volume, the broad market is likely to head for a consolidation after the recent rally. While the index-link counters may continue to consolidate, the penny stocks may still dominate the active scene.
Overnight, the Dow rose +4.24 points or +0.03% to close at 12,878.28. Today, the FBM KLCI is likely to trade within a range of 1,557 to 1,572
This week's expected range: 1524 – 1589
Today’s expected range: 1557 – 1572
Resistance: 1568, 1570, 1572
Support: 1557, 1559, 1562
Stocks to watch: HIBISCS, XINQUAN, WCT