Stocks on Bursa Malaysia closed lower yesterday with the benchmark FBM KLCI tumbled for the second consecutive day, dragged down mainly by losses in TENAGA over the new electricity tariff cut. TENAGA, dragged the composite index lower by 4.55 points, settled the day 46 sen lower at RM14.40. At close, the FBM KLCI settled at 1,798.95, down 12.17 points or 0.67%, after touching an intra-day low of 1,790.8. Decliners thumped advancers by 508 to 321, while 313 counters were unchanged. Total turnover decreased to 2.2 billion units valued at RM2.4 billion from 2.5 billion units valued at RM2.3 billion transacted on Tuesday.
Despite the Dow’s rebound overnight with a three digit gains, the FBM KLCI opened 0.14 of a point lower at 1,810.98 and fluctuated in a narrow range mostly in the negative territory throughout the morning session. The key index surged to hit an intra-day high of 1,812.08 at the opening bell of the second session but plunged lower on heavy selling pressure on news of the new electricity tariff cut to hit an intra-day low of 1,790.80, losing 20.32 points at its worst. Nevertheless, some last minute bargain hunting managed to pull the key index to close off low. Chart-wise, the FBM KLCI formed a bearish long black candlestick which indicates heavy selling pressure, and hence, the key index is likely to continue to correct downward today on follow through selling. Immediate downside support zone is at 1,790 to 1,779, while the overhead resistance zone is at 1,812 to 1,818.
MACD hooked downward and its histogram contracted downward substantially, indicating an increased in the downward momentum. RSI (14) plunged lower to 57.8 from 64.1, indicating an increased in the bearish momentum which pulled the key index to the mildly bullish zone from a bullish state. Stochastic hooked downward to 71.1 from 78.5, and made a dead-cross over the slow stochastic line, issuing a sell signal and indicated the FBM KLCI is turning bearish for the short term. Readings from the indicators showed that the FBM KLCI is losing its momentum and is undergoing a strong pullback correction. Hence, the key index is likely to further consolidate.
With the strong pullback yesterday, the FBM KLCI has closed below the 5 and 10-day simple moving average (SMA), indicating the key index is likely to correct further for the immediate short term and an end to the pre-Chinese New Year rally. Nonetheless, the FBM KLCI is still closing above the 15 and 20-day SMA, indicating the short term uptrend is still intact. Immediate downside moving average support is at 1,790, provided by the 15 and 100-day SMA, and a break of this moving average support will see the key index sliding lower to the test the support of the 20-day SMA currently at 1,782. Nevertheless, the medium term trend still remained sideways, while the long term trend is still down.
Overnight, the Dow fell 6.62 points or -0.04% to close at 17,862.14. Today, the FBMKLCI is likely to trade within a range of 1,767 to 1,833.
This week's expected range: 1760 – 1866
Today’s expected range: 1767 – 1833
Resistance: 1810, 1821, 1833
Support: 1767, 1779, 1789
Stocks to watch: BJAUTO, BONIA, FGV, FLBHD, HEVEA, HHGROUP, MKH, NIHSIN, PERWAJA, POHUAT, SCICOM, SYCAL, VS
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