Stocks on Bursa Malaysia ended lower yesterday as investors stayed cautious despite a longer-term positive outlook. Many remained on the sidelines ahead of Chinese New Year celebrations next week, and fears that China would raise interest rates again to suppress strong inflation also led investors to book profits in some Asian markets. The FBM KLCI which opened 2.93 points higher at 1,550.36 was dragged down by profit-taking activities to close 4.46 points or 0.29% lower at 1,542.97. Decliners led advancers by 548 to 258 while 282 were unchanged. Volume declined to 1.833 billion shares valued at RM2.210 billion from 1.891 billion shares worth RM3.159 billion last Friday.
Taking cue from the strong performance of Wall Street last Friday, the FBM KLCI opened 2.93 points higher at 1550.36 and surged to the intra-day high of 1550.95 within the first five minutes, thereafter, profit-taking activities set in and sent the key index to the intra-day low of 1539.48, losing 7.95 points at its worst. Bargain-hunting activities which surfaced in the afternoon helped lift the key index to close off low at 1542.97. Chart-wise, the FBM KLCI formed a bearish black candlestick, which indicates continuation of the down trend. The key index actually came near the 38% Fibonacci retracement level at 1538 and rebounded off it. If this level cannot hold, then the key index may continue its southward journey to test the lower support at 1531 and 1528.
MACD continued to slide lower and the histogram is getting longer in the negative territory, indicating a pick up in the downward momentum. RSI (14) at 49.4 has broken the 50 level, which indicates the relative strength of the key index has turned mildly bearish for the short term. Stochastic continued sliding lower to 51.9, indicates the down cycle is picking up steam. Readings from the indicators indicates that the FBM KLCI is likely to continue with its correction and consolidation process.
As the FBM KLCI is currently below the short term 5, 10 and 20-day moving average, the short term trend remained down, while the medium and long term uptrend is still un-spoilt. Immediate overhead resistance zone is at 1550 to 1560, while the downside support zone is at 1538 to 1528.
Overnight, the Dow rallied +108.68 points or +0.92% higher to close at 11,980.52. Today the FBM KLCI is likely to trade within a range of 1526 to 1562.
This week's expected range: 1508 – 1605
Today’s expected range: 1526 – 1562
Resistance: 1550, 1556, 1562
Support: 1526, 1533, 1538
Stocks to watch: HWGB, OLYMPIA, SEG
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