Stocks on Bursa Malaysia ended lower after a range-bound trade yesterday with investors locking in profits or reducing their holdings after the recent run up. The FBM KLCI closed 3.83 points or 0.29% lower at 1,325.87. It had opened 2.01 points lower at 1,327.69 and moved between the 1,325.71 and 1,333.49 levels yesterday. Losers led gainers by 332 to 318, while 294 counters were unchanged. Volume traded was slightly higher at 749 million shares worth RM1.076 billion compared with 684 million shares worth RM1.118 billion on Wednesday.
The FBM KLCI had opened 2.01 points lower and gradually recovered its lost ground to be back into the positive territory near mid day, however, sellers surfaced and pushed the key index back into the negative territory to close near the lowest point of the day. The price action led to the formation of an inverted-hammer like candlestick, which is a top reversal signal when it forms at the higher end of the chart. As it was mentioned before, the key index is now bound with a strong overhead resistance zone at 1330 to 1350; and an immediate support zone at 1300 to 1320. Hence, the key index might continue to move sideways with a downward bias in the current range.
MACD continued to move higher but at a reduced rate, as shown by its shorter histogram, which indicates a reduction in the upward momentum. RSI(14) at 59.7 has hooked downward, and is back into the mildly bullish zone. Stochastic at 84.1 has crossed below its slow stochastic and moved lower, might possibly indicate the beginning of a down cycle, it will be confirmed if the Stochastic cross below the 80 level. Signals from the indicators point towards possible further correction or consolidation of the benchmark FBM KLCI.
The FBM KLCI has now closed below the 5-day moving average (MA), which indicates the key index has turned weak for the short term, hence, might corrects further downward. However, the 60-day MA at 1318 and the 10-day MA at 1313 might provide some support to the down move. Nonetheless, the underlying short term trend is still up for the time being, medium trend is sideways, while the long term trend remained up.
In view of a lack of fresh leads locally, the benchmark FBM KLCI is expected to continue tracking the performance of regional bourses. Overnight, the Dow closed -145.64 points or -1.41% lower at 10,152.80. Today, the FBM KLCI is likely to trade within a range of 1313 to 1336.
This week's expected range: 1279 – 1349
Today’s expected range: 1313 – 1336
Resistance: 1328, 1331, 1336
Support: 1313, 1318, 1322
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