Stocks on Bursa Malaysia closed lower yesterday, weighed down by profit-taking in heavyweights after recent rally. The local market edged lower in line with regional peers which tracked the weak cue from Wall Street last Friday, and sentiment was also dampened by the victory of the anti-austerity Syriza party in the recent Greek elections, as it raised concerns that the country could abandon budget constraints and cause instability in Europe. At close, the FBM KLCI stood at 1,796.44, down 6.64 points or 0.37%, after opening 2.59 points lower at 1,800.49 and moved between 1,792.65 and 1,801.06 throughout the day. Decliners outpaced gainers by 559 to 312, while 266 counters were unchanged. Total volume declined to 1.88 billion shares worth RM2.13 billion from 2.61 billion units valued at RM3.13 billion last Friday.
Taking cue from the weak performance on Wall Street last Friday, the FBM KLCI opened 2.59 points lower at 1,800.49. The FBM KLCI rebounded slightly to touch the intra-day high of 1,801.06 but could not sustain, and the key index continued to slide lower on profit-taking activity to hit the intra-day low of 1,792.65, losing 10.43 points at its worst before rebounding in the last minute to close off low. Chart-wise, the FBM KLCI formed a black hangman candlestick pattern in bearish Harami position. The bearish Harami candlestick pattern is a top reversal candlestick pattern which indicates a change in market sentiment from bullish to bearish, and hence, the FBM KLCI is likely to further correct or consolidate today. Immediate downside support zone is at 1,792 to 1,770 with 1,788 being a critical support, while the overhead resistance zone is at 1,801 to 1,809.
MACD and its continued to rise but the increment in the histogram was smaller compared to the previous bar, indicating a reduction in the FBM KLCI’s upward momentum. RSI (14) hooked downward to 63.8 from 66.7, indicating a mild pullback correction, and the relative strength of the FBM KLCI is still in the bullish zone. Stochastic hooked downward to 91.2 from 95, and is still staying above the slow stochastic line, indicating a mild pullback correction, and the short term up cycle is still intact. Readings from the indicators showed that the FBM KLCI is undergoing a correction after the recent rally.
The short term trend of the FBM KLCI still remained up as the key index continues to stay above the short term simple moving averages (SMA). The medium term trend has turned sideways to up as the 50-day SMA has turned flat from a downtrend before and the key index continued to stay above the 50 and 60-day SMA. Nevertheless, the long term trend of the FBM KLCI is still down as the key index continued to stay below the long term moving averages. In order for the FBM KLCI to reverse its long term downtrend, it must break above the overhead resistance zone posted by a cluster of the long term moving averages with the highest resistance level at 1,835-point posted by the 200-day SMA. On the broader market, rotational play in small caps and ACE market counters is likely to continue.
Overnight, the Dow rose 6.10 points or 0.03% to close at 17,678.70. Today, the FBMKLCI is likely to trade within a range of 1,783 to 1,809.
This week's expected range: 1698 – 1873
Today’s expected range: 1783 – 1809
Resistance: 1800, 1805, 1809
Support: 1783, 1788, 1792
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