FBM KLCI - maintained above 1500

Stocks on Bursa Malaysia closed broadly lower on Tuesday in line with the fall in regional markets as fears loomed over the possibility of China further tightening its monetary policies. South Korea was the latest to follow China with the Bank of Korea raising the seven-day repurchase rate on Tuesday by 0.25 percentage point to 2.5%. The local market was closed for Hari Raya Aidil Adha yesterday and this also prompted investors to off load their positions ahead of the holiday.

However, the FBM KLCI finished 1.98 points higher at 1503.54 led by modest gains in selected blue-chips. Decliners led advancers by 645 to 203 while 253 counters were unchanged. Turnover increased to 1.325 billion shares valued at RM1.736 billion, compared with Monday’s 1.087 billion shares, worth RM1.256 billion.

The FBM KLCI opened 1.55 points higher at 1503.11 and was holding well in the positive territory throughout the morning session. However, the index plunged to the intra-day low of 1491.76 in the afternoon session following the plunged in regional markets on news of Korea’s interest rate rise. Nevertheless, bargain-hunting in late afternoon helped lift the key index off-low and a last minute buying of selected heavyweights pushed the key index back to the positive territory to close at 1503.54.

Chart-wise, the FBM KLCI formed a Doji candlestick with long lower shadow which indicates strong buying support for index-link counters when the key index came below the 1500 psychological support level. The key index is now below the short term 5 and 10-day moving averages (MA) which will continue to exert selling pressure to the key index. However, the medium term 30, 50 and 60-day MAs will continue to provide support to the key index at 1497, 1481 and 1470.

MACD continued to slide lower indicating the increased in downward momentum, nevertheless, as MACD is still above the zero line, the current weakness is just a short term correction. RSI (14) at 54.5 has climb higher, but still in the neutral zone. Stochastic oscillator has dropped to 30.9, indicating the continuation of downward momentum and the down cycle. Mixed signals from the indicators indicate the key index will continue its consolidation with a downward bias.

The short term trend is currently down as the 5-day MA has just crossed below the 10-day MA. The medium to longer term trend is, however, still up and will provide support to the short term correction. Immediate support zone for the key index is at 1488 to 1470, while the overhead resistance zone is at 1510 to 1532. Critical support levels at the moment are the 1500 psychological level and the 1497 support level provided by the 30-day MA, if the FBM KLCI closes below these levels, it may trigger another round of sell down.

Overnight, The Dow fell -15.62 points or -0.14% lower to close at 11,007.88. Today, the FBM KLCI is likely to trade within a range of 1482 to 1517.

This week's expected range: 1450 – 1528
Today’s expected range: 1482 – 1517

Resistance: 1508, 1513, 1517
Support: 1482, 1487, 1495