Stocks on Bursa Malaysia ended mixed in thin trade yesterday with profit-taking and bargain-hunting emerging after previous gains and sell-offs. A weak regional market following negative performance overnight on Wall Street weighed on investors sentiment as the meeting between German chancellor Angela Merkel and French president Nicolas Sarkozy was unable to restore confidence in the Euro zone. The FBM KLCI rose 0.23 of a point or 0.01% to 1,503.3. Losers overwhelmed gainers by 445 to 265 while 308 counters closed unchanged. Volume declined to 850.55 million shares worth RM1.71 billion compared with 892.81 million shares valued at RM1.6 billion on Wednesday.
The FBM KLCI opened with an up gap of 3.64 points and surged to the intra-day high of 1,507.59 within five minutes after opening. Heavy profit-taking activity pushed the key index lower to hit the intra-day low of 1,497.37 near mid afternoon, and a last minute buying of selected blue-chips pushed the key index back to the positive zone. Chart-wise, the FBM KLCI formed a bearish black hanging-man candlestick, which is a top reversal candlestick pattern, and the key index is likely to move lower today. Together with the bearish candlestick patterns formed in the last two days, this may mark the end of the bear market rally, and the downtrend may continue.
MACD was higher, but is still below its signal line, indicating a gradual improvement in the upward momentum. However, as the MACD line is still below the zero-line, the current upward climb may indicate just a rebound in a bear market. RSI (14) is marginally higher at 38.4, and is tapering off, indicating the upward relative strength is weakening. Stochastic was higher at 57.7 but showed sign of tapering off, indicating the short term up cycle is still in continuation but the upward strength starts to weaken. Readings from the indicators showed that the rebound rally of the FBM KLCI shows signs of weakening, and may take a pause.
The short term 5-day moving average (MA) has just crossed above the 10-day MA, giving out a first signal that the short term trend of the FBM KLCI has just turned upward. Nonetheless, as the key index is still below other longer period MAs, the current up turn could well be just part of a rebound, and the main trend is still down. Immediate downside support zone is at 1,497 to 1,484, while the immediate overhead resistance zone is at 1,507 to 1,510. With the drastic reduction in volume, the market may goes into an extended phase of consolidation.
Overnight, the Dow fell -419.63 points or -3.68% to close at 10,990.58. Today, the FBM KLCI is likely to trade within a range of 1,487 to 1,518.
This week's expected range: 1433 – 1525
Today’s expected range: 1487 – 1518
Resistance: 1508, 1513, 1518
Support: 1487, 1492, 1497