Stocks on Bursa Malaysia tumbled for the second consecutive day yesterday on persistent selling pressures amid weak regional markets and Wall Street. Regional markets followed overnight US markets into negative territory as investors were spooked by the Federal Reserve’s statement of a possible June 2015 interest rate increase. The FBM KLCI was 13.7 points or 0.76% lower at 1,782.18, after opening 4.29 points lower at 1,791.59 and fluctuated between 1,783.43 and 1,794.82 throughout the day. Decliners outpaced gainers by 581 to 262, while 301 counters were unchanged. Total turnover decreased to 1.9 billion shares worth RM2.2 billion from 2 billion shares worth RM2.3 billion on Wednesday.
Taking cue from the bearish performance on Wall Street overnight, the FBM KLCI opened 4.29 points lower at 1,791.59 and rebounded to touch the intra-day high of 1,794.82 twenty minutes after opening. However, the rebound found no follow through and selling pressure which emerged dragged the key index lower for the rest of the day to hit the intra-day low of 1,779.17 before rebounding slightly in the last hour to close off low. Chart-wise, the FBM KLCI formed a bearish black candlestick which indicates sellers were dominant for the day, and hence, the FBM KLCI is likely to further correct downward or slip lower today. Immediate downside support zone is at 1,779 to 1,770, while the overhead resistance zone is at 1,794 to 1,800.
MACD hooked downward for the first time after climbing upward continuously for fifteen sessions, and its histogram further contracted downward for a second bar, indicating the possible beginning of a corrective phase after the recent uptrend phase. RSI (14) fell lower to 56.4 from 62.1, indicating a strong correction which changed the relative strength of the FBM KLCI from a bullish state to mildly bullish. Stochastic dropped lower to 82.3 from 88.2 after making a dead-cross the day before, indicating the key index is turning weaker and a continuation of the short term down cycle. Readings from the indicators showed that the FBM KLCI was in a correction mode, and is likely to further correct downward.
The bigger technical picture of the FBM KLCI still remained very the same in that the short term trend is up, and the medium term trend is sideways, while the long term trend is down. However, with the bearish performance yesterday, the FBM KLCI has closed below the 5-day simple moving average (SMA) but is still above the 10-day SMA, indicating the beginning of a short term correction after the recent rally. Hence, the FBM KLCI is like to further consolidate today, and a break of the immediate downside support of the 10-day SMA at 1,778 will see the key index sliding lower to the lower support zone of 1,771 to 1,750 provided by a cluster of short to medium term moving averages.
Overnight, the Dow rose 225.48 points or 1.31% to close at 17,416.85. Today, the FBMKLCI is likely to trade within a range of 1,760 to 1,810.
This week's expected range: 1698 – 1873
Today’s expected range: 1760 – 1810
Resistance: 1791, 1801, 1810
Support: 1760, 1769, 1775
Stocks to watch: BTM, DUFU, GENTING, HARVEST, INTEGRA, IRIS, KANGER, KBES, KTB, KPJ, LCTH, PUC, TGOFFS, YTL, ZELAN
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