Stocks on Bursa Malaysia ended lower for the second day yesterday in line with Wall Street’s weak performance overnight, led by finance and gaming counters while buying interest was seen in oil and gas as well as utilities counters. The FBM KLCI fell 1.09 point or 0.08% to close at 1362.74, snapping an eight-day gain, after opening 0.32 point lower at 1363.51. Losers led gainers by 363 to 322 while 286 counters were unchanged. Volume fell to 811 million shares worth RM1.1 billion from 1.1 billion shares worth RM1.4 billion on Tuesday.
The FBM KLCI opened 0.32 point lower and rebounded to the positive territory briefly to touch the intra-day high of 1364.05. The key index was trading in the negative territory for a major part of the day and hit the intra-day low of 1359.19, losing 4.64 points, before late buying lifted it to close 1.09 point lower at 1362.74. This leads to the formation of a hammer-like candlestick which is a bottom reversal signal, hence, the index might continue its rebound to move higher today. Immediate resistance is expected at 1371, while support is at 1359.
MACD has turned flat, with its histogram turning shorter, indicating a slow down in the upward momentum. RSI(14) at 71 has hooked down, remained in the overbought zone, indicating the underlying strength is still strong. Stochastic at 84.6 continued to move lower, but remained in the overbought zone. Signals from the indicators reflected the correction mode of the key index, nevertheless, the underlying strength of the index is still strong. After the correction is over, the key index is expected to continue its up move.
Despite the correction, the FBM KLCI continues to close above its very short term 5-day moving average (MA). The 10 and 30-day MA remained pointing northeast indicating the current uptrend was unspoiled. If the index were to correct further downward, it is expected to get support from the 10-day MA at 1355 level. Immediate overhead resistance zone is at 1370 to 1383, while the support zone is at 1350 to 1360.
The local market is expected to remain buoyant with rotational play on lower liners remain active, while the FBM KLCI is expected to continue tracking the performance of regional key indexes.
Overnight, the Dow rose +44.05 points or +0.41% to close at 10,680.43. Today, the FBM KLCI is likely to trade within a range of 1355 to 1370.
This week's expected range: 1340 – 1383
Today’s expected range: 1355 – 1370
Resistance: 1365, 1367, 1370
Support: 1355, 1357, 1360
Stock to watch: TIMECOM, TWSCORP
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