Stocks on Bursa Malaysia closed higher yesterday on active buying of blue-chips, particularly finance and plantation, and in line with gains on regional markets. The market took the cue from the US market’s overnight weak close and started out in negative territory due to selling pressure. The FBM KLCI closed higher by 2.17 points or 0.14% to 1,561.77 after opening 2.13 points easier at 1,557.47. Market breadth was positive with advancers leading decliners by 374 to 334 while 325 counters closed unchanged. Volume rose to 1.04 billion shares valued at RM1.54 billion from 810.53 million shares worth RM1.57 billion registered on Monday. 

Taking cue from the weak overnight close of the US market, the FBM KLCI opened with a down gap of 2.13 points at 1,557.47 and slipped to the intra-day low of 1,554.58 within the first fifteen minutes. The key index rebounded and climbs upward gradually to hit the intra-day high of 1,561.91 before ending the day slightly off high at 1,561.77. Chart-wise, the FBM KLCI formed a piercing-line candlestick, which is a bottom reversal pattern. However, a confirmation of the bottom reversal can only be established if the key index is able to close above the 1,566-point level, otherwise, it may just turn out to be a technical rebound, and the downtrend will continue.

MACD continued to slide lower and crossed below the zero-line, sending out a bearish sell signal for the short to medium term. RSI (14) has hooked upward to 44.9, indicating the short term relative strength of the key index is mildly bearish. Stochastic is at 21.3, and has again crossed below its slow stochastic line, flashing out a sell signal, and indicating a possible continuation of the current down cycle. Readings from the indicators signaled that the FBM KLCI is currently weak and the momentum is negative bias, and hence the current correction is likely to prolong. 

With the FBM KLCI continued to close below all the short term moving averages (MA), the short term trend remained down. The key index had tested the support of the medium term 60-day MA at 1,555 yesterday and rebounded off it. As the key index is staying just slightly above the 60-day MA, it is critical to see whether the key index is able to hold well above it. The long term uptrend, nonetheless, is still intact. Immediate support zone is at 1,554 to 1,550, while the overhead resistance zone is at 1,566 to 1,570.

Overnight, the Dow fell another -91.50 points or -0.73% to close at 12,501.30. Today, the FBM KLCI is likely to trade within a range of 1,549 to 1,570.

This week's expected range: 1529 – 1600

Today’s expected range: 1549 – 1570

Resistance: 1565, 1567, 1570

Support: 1549, 1552, 1556