Stocks on Bursa Malaysia ended lower yesterday as investors locked in profits after seven consecutive days of rally. The FBM KLCI rose 0.23 point or 0.02% to close at 1363.83 after hitting the intra-day high at 1370.52, which is a fresh high for the year. Losers led gainers by 479 to 250 while 270 counters were unchanged. Volume rose to 1.105 billion shares worth RM1.462 billion from 963 million shares worth RM1.283 billion on Monday.
The FBM KLCI opened with an up gap of 2.56 points and surged to the intra-day high of 1370.52 within the first thirty minutes of the day, and heavy profit-taking or distribution activities set in which sent the key index to the intra-day low of 1359.55 before last minute buying of selected blue-chips lifted the index off low to close marginally higher at 1363.83. This resulted in the formation of a black spinning-top candlestick with long upper and lower shadows, which indicates high volatility and hesitation of the key index to move higher. Immediate strong resistance is met at 1370 level.
MACD continued to move higher but start to taper-off, as shown by the shorter histogram, which indicated a slow down in the upward momentum. RSI(14) at 72.4 is marginally higher and is tapering off, indicating the waning of the upward strength. It has entered the overbought zone since three days ago and a correction is impending with the first sign of weakness. Stochastic at 90.1 has crossed below its slow stochastic, giving out sign of a correction. Signals from the indicators are pointing towards a toppish market, and a correction is in the brewing.
The FBM KLCI is currently above all its short, medium and long term moving averages (MA), indicating a strong uptrend condition. However, a correction is expected to take place. The 5-day MA will provide support at 1360 and the 10-day MA support is at 1352, hence, immediate support zone for the key index lies at 1350 to 1360. Immediate overhead resistance zone is at 1370 to 1383.
The market is expected to remain buoyant with rotational play in lower liners, and the FBM KLCI is likely to continue tracking the performance of major regional indexes.
Overnight, the Dow fell -38.00 points or -0.36% to close at 10,636.38 after a strong rally yesterday. Today, the FBM KLCI is likely to trade within a range of 1348 to 1375.
This week's expected range: 1340 – 1383
Today’s expected range: 1348 – 1375
Resistance: 1368, 1371, 1375
Support: 1348, 1354, 1359
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