Stocks on ended lower yesterday due to selling in heavyweights after the recent highs, coupled with a lack of fresh leads. Investors took cue from the weak trading across regional markets on renewed fears over the Euro-zone sovereign debt especially Greece, while Wall Street overnight was closed for the Independence Day holiday. The FBM KLCI fell 0.5 of a point or 0.03% to 1,581.85. Market breadth was negative with losers leading gainers 386 to 319 while 330 counters were unchanged. A total of 728.65 million shares valued at RM1.463 billion were traded against 728.68 million shares worth RM1.377 billion on Monday.
The FBM KLCI opened 1.6 points higher at 1,583.95 and surged to the intra-day high of 1,584.83 within the first five minutes. Profit-taking activity which emerged sent the key index into the negative territory and the index was just moving in a tight range before closing marginally lower in the red. Chart-wise, the FBM KLCI formed a small black spinning-top candlestick which indicates consolidation and indecision of the index’s direction. With two black spinning-top candlesticks appearing at this high level, it showed that the key index was cautious in making further up move and may further correct itself.
MACD was marginally higher but was tapering off, while the histogram starts to turn shorter, giving out a first signal that the upward momentum is slowing down. RSI (14) is marginally lower at 68.55, reflecting the minor correction, but is still in the bullish zone. Stochastic continued to slide lower to 87.1, as stochastic is still holding above the 80- level, the current weakness may just be a short term correction. Readings from the indicators showed that the upward momentum of the FBM KLCI is slowing down and the key index is likely to further consolidate itself.
The underlying short, medium and long term uptrend of the FBM KLCI remained intact. Immediate overhead resistance zone is at 1,585 to 1,590, while the downside support zone is at 1,577 to 1,566. As the overall market volume continued to remain sluggish, the FBM KLCI is likely to remain in range-bound while rotational play prevails among the second and third liners.
Overnight, the Dow fell a marginal -12.90 points or -0.10% to close at 12,569.87. Today, the FBM KLCI is likely to trade within a range of 1,575 to 1,590
This week's expected range: 1545 – 1606
Today’s expected range: 1575 – 1590
Resistance: 1585, 1587, 1590
Support: 1575, 1577, 1579
Stocks to watch: KBB