Stocks on Bursa Malaysia traded broadly lower yesterday after three days of rally. The FBM KLCI touched an intra-day high of 1299.70, a fresh 20-month high, before closing 1.75 point or 0.14% lower at 1291.42. Market breadth was negative with losers led gainers by 449 to 324, while 231 counters were unchanged. Volume was lower at 1.474 billion shares worth RM1.899 billion.
As mentioned in yesterday’s report that the FBM KLCI would test the psychological level of 1300, in fact, it did come near to it with just 0.3 of a point short to hit it, and heavy profit taking sets in, with that the FBM KLCI formed a black candlestick with long upper shadow, a top reversal signal, which indicates sellers were dominant. The market would take the opportunity to take profit when the index comes near the psychological resistance level of 1300, and more so with the hefty gains after three days of rally.
MACD continued to move higher, whereas RSI hooked down slightly, and Stochastic has just crossed below its slow Stochastic, together with the black candlestick with a long upper shadow they indicate an impending profit taking correction is ahead. The index would, however, find strong support at the 1288 and 1280 levels. The underlying trend as indicated by the longer term moving averages is still up.
Today, the FBM KLCI is likely to trade within a range of 1280 to 1303
This week's expected range: 1248 – 1300
Today’s expected range: 1280 – 1303
Resistance: 1297, 1301, 1303
Support: 1280, 1284, 1288
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