Stocks on Bursa Malaysia closed lower yesterday on profit taking in key heavyweights especially finance as well as oil and gas amid external weakness. Market sentiment was dampened by the reemergence of a geopolitical risk in Ukraine and uncertainty caused by renegotiations between the new anti-austerity Greek government and international lenders. At close, the FBM KLCI dropped 7.29 points or 0.40% to 1,795.88 after moving between 1,790.02 and 1,800.64 throughout the day. Decliners outpaced gainers by 440 to 340, while 339 counters were unchanged. Total turnover declined to 2 billion shares valued at RM2.3 billion from 2.1 billion units valued at RM2.2 billion on Tuesday.
Taking cue from the weakness on Wall Street overnight, the FBM KLCI opened 8.41 points lower at 1,794.76 and plunged lower to hit the intra-day low of 1,790.02 six minutes after opening. The key index rebounded from the low and climbed higher to touch the intra-day high of 1,800.64 at midmorning. However, the upward move was met with resistance from profit-taking activity which dragged the index lower and moved sideways range-bound for the rest of the day. Chart-wise, the FBM KLCI formed a white spinning-top candlestick in Harami position which indicates uncertainty of market direction amid consolidation. Hence, the FBM KLCI is likely to continue to consolidate today with a downward bias. Immediate downside support zone is at 1,788 to 1,770, while the immediate overhead resistance zone is at 1,800 to 1,810.
MACD continued to climb higher but its histogram contracted downward for the first time after expanding upward continuously for thirteen bars, indicating a reduction in the upward momentum and possibly the beginning of a consolidation phase. RSI (14) hooked downward to 62.1 from 65.5, indicating a pullback correction or consolidation as the relative strength is still in the bullish zone. Stochastic was lower at 88.2 from 91.3, and has made a dead-cross over the slow stochastic line, issuing a stochastic sell signal, and indicating the possible beginning of a short term down cycle. Readings from the indicators showed that the FBM KLCI is going into a consolidation mode with a downward bias.
The technical picture of the FBM KLCI remained very much unchanged in that the short term trend is up; the medium term trend is sideways, while the long term trend is still down. However, the pullback yesterday has dragged the FBM KLCI to close below the 5-day simple moving average (SMA), indicating the key index is going into consolidation for the immediate short term, and a break of the immediate support at 1,788 will see the key index sliding lower towards the 10-day SMA support at 1,774 follow by the next support at 1,770. On the broader market, rotational play on small caps and ACE market counters is still alive as volume continued to stay around the two billion shares level.
Overnight, the Dow plunged another 195.84 points or -1.13% to close at 17,191.37. Today, the FBMKLCI is likely to trade within a range of 1,779 to 1,811.
This week's expected range: 1698 – 1873
Today’s expected range: 1779 – 1811
Resistance: 1801, 1806, 1811
Support: 1779, 1784, 1790
Stocks to watch: AHB, BIMB, BPPLAS, CBIP, CLIQ, DUFU, E&O, EDUSPEC, FAJAR, GHLSYS, KSL, MIECO, MITRA, TGOFFS, VIS
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