Stocks on Bursa Malaysia closed lower yesterday on selling of finance counters. Banking stocks stole the focus in yesterday’s trading in light of the new base rate (BR) mechanism implementation by Bank Negara Malaysia from Jan 2, 2015, as the new mechanism will raise competition among banks. The benchmark FBMKLCI declined 16.15 points or 0.92% to close at 1,736.62 after moving between 1,734.51 and 1,759.15 throughout the day. Losers thumped gainers by 502 to 271, while 257 counters were unchanged. Total volume rose to 1.5 billion units worth RM1.4 billion from 1.1 billion units worth RM921.63 million on last Friday.
The FBMKLCI opened 5.66 points higher at 1,758.43 and surged higher to hit the intra-day high of 1,759.15 briefly after opening. However, heavy selling pressure which emerged caused a plunged in the key index to hit the morning session low of 1,735.64 in the next thirty minutes, and the key index rebounded slightly to move sideways for the rest of the morning session. Another round of selling pressure in mid-afternoon dragged the key index to the intra-day low of 1,734.51 before it rebound to close off low. Chart-wise, the FBMKLCI formed a long black candlestick and a bearish engulfing pattern, a key reversal pattern which indicates heavy selling pressure. Hence, the FBMKLCI is likely to slip lower today on continued selling pressure. Immediate downside support zone is at 1,732 to 1,720, while the overhead resistance zone is at 1,759 to 1,770.
MACD hooked downward, and its histogram further contracted southward, indicating a change in the momentum from up to down, and an end to the technical rebound over the last two weeks. RSI (14) slipped lower to 43.5 from 48.2, indicating the key index is turning bearish. Stochastic was lower at 79.4 from 89.6, indicating the beginning of a bearish down cycle. Readings from the indicators showed that the FBMKLCI has turned bearish and is likely to fall further.
The medium to long term trend of the FBMKLCI still remained down and bearish, and with the bearish downward move yesterday, the short term uptrend over the last two weeks of December 2014 has ended. With this, the FBMKLCI is likely to slide lower to re-test the psychological support of 1,700-point and a failure would see the key index slipping lower to re-test the pivot low of 1,671.82. If the FBMKLCI fails to hold at the 1,671-point support level, it is likely to slide lower to test the 1,650 to 1,600 zone.
Overnight, the Dow fell 331.34 or -1.86% to close the second trading day of Year 2015 at 17,501.65. Today, the FBMKLCI is likely to trade within a range of 1,703 to 1,783.
This week's expected range: 1710 – 1799
Today’s expected range: 1703 – 1783
Resistance: 1752, 1768, 1783
Support: 1703, 1718, 1727
Stocks to watch: ASIAPAC, BRIGHT, DUFU, FBMKLCI-HB, HEVEA, IRIS, JAKS, KAREX, KOSSAN, LATITUD, MAGNA, MYEG, OKA, ORNA, PARKSON, POHUAT, SLP, TGUAN, WONG
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