Stocks on Bursa Malaysia took a breather yesterday after seven successive days of run up since Tuesday last week. The FBM KLCI was in a correction mood throughout the day, it lost 7 points or 0.52% to close at 1334.08 after opening 1.5 points lower. Losers beat gainers by 390 to 242 while 289 counters were unchanged. Volume dropped to 619 million shares valued at RM1.128 billion from previous day’s 801 million shares worth RM1.538 billion.
The FBM KLCI opened 1.5 points lower at 1339.58 and traded lower throughout the day. It hit the intra-day low of 1331.20, but last minute buying of selected blue-chips help lift the key index off low to close at 1334.08, forming a bearish black candlestick which covered the gap it formed the day before. Hence, the gap formed yesterday is an exhaustion gap which was the last push for distribution, and the key index is expected to correct downward further. Immediate support level is expected at 1330 and 1326.
MACD is higher but is tapering-off, as shown by the shorter histogram, indicating a loss in upward momentum. RSI(14) at 60.8 has hooked downward and Stochastic at 93 too has hooked downward, both reflecting the correction that the key index is undergoing.
The short term trend is up as indicated by the 5 and 10-day moving average (MA), medium term trend is sideways while the long term uptrend remained intact, however, the long term MAs are converging, which indicates a loss in long term upward momentum. The key index is still having problem in overcoming the immediate overhead resistance zone at 1340 to 1350. Immediate support zone lies at 1305 to 1320.
Overnight, the Dow closed -7.41 points or -0.07% lower at 10,359.31. Today, the FBM KLCI is likely to trade within a range of 1321 to 1349.
This week's expected range: 1283 – 1360
Today’s expected range: 1321 – 1349
Resistance: 1339, 1344, 1349
Support: 1321, 1326, 1330
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