Stocks on Bursa Malaysia ended lower on Tuesday on extended technical sell-off of most counters, especially financial and small-cap stocks. The finance counters was hit by consistent profit-taking ahead of the monetary policy committee meeting of Bank Negara Malaysia next Thursday. The FBM KLCI stood at 1,566.51 points, down 3.53 points or 0.22% after opening 1.19 points lower at 1,568.85. Market breadth was negative with losers overtaking gainers by 545 to 293 while 270 counters were unchanged. A total of 1.632 billion shares, valued at RM2.204 billion, were traded against 1.704 billion shares, worth RM2.02 billion, registered on Tuesday. The local bourse was closed for Thaipusam Holiday yesterday.
The FBM KLCI opened 1.19 points lower and continued trading lower throughout the day to touch the intra-day low of 1561.87, losing as much as 8.17 points before a last minute buying of selected heavyweights which lifted the key index to close off low. Chart-wise, the FBM KLCI formed a hammer candlestick, which is a bottoming signal. It indicates sellers were initially dominant in pushing the key index down, but buyers later surfaced to push it up. Immediate support is at 1558.
MACD continued to slide lower, indicating a continued loss in the upward momentum and turning into downward momentum for the short term. RSI (14) is lower at 65.7, indicating a continued loss of the market strength; nevertheless, it is still in the bullish zone. Stochastic has crossed below its slow stochastic line, but is till above the 80 level, hence, it could just well be a correction. Readings from the indicators indicated a loss in the upward momentum and market strength; however, as all three indicators are still in their respective bullish zone, it reflects a short term correction which is considered healthy.
The key index is now closing below the short term 5 and 10-day moving averages which may continue to exert selling pressure onto the key to further consolidate. If the key index is able to hold well above the immediate support at 1558, the consolidation should be viewed as an opportunity to further collect quality shares. If the support at 1558 could not hold, then it may slide further downward to the next support zone at 1550 to 1532. The medium to longer term uptrend, nevertheless, remained intact.
As the Chinese New Year is approaching, the market may continue to see more profit-taking activities by those who want to lock in profit before the festive holiday. Overnight, the Dow fell -2.49 points or -0.02% to close marginally lower at 11,822.80. Today, the FBM KLCI is likely to trade within a range of 1555 to 1576.
This week's expected range: 1542 – 1594
Today’s expected range: 1555 – 1576
Resistance: 1570, 1573, 1576
Support: 1555, 1558, 1562
Stocks to watch: POS, PENERGY, MUTIARA, MITRA, EKOVEST, BORNOIL, MASTEEL, KUB
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