Stocks on Bursa Malaysia closed in negative territory yesterday, as investors resorted to profit-taking after hitting historic high, while regional market was weak with no overnight lead from Wall Street which was closed for a public holiday. The FBM KLCI fell 4.45 points or 0.28% to 1,570.04 after opening 1.43 points higher at 1,575.92. Market breadth was negative with losers leading gainers by 731 to 174 while 230 counters were unchanged. A total of 1.704 billion shares worth RM2.02 billion were traded against 1.907 billion shares valued at RM2.201 billion on Monday.
The FBM KLCI opened 1.43 points higher at 1575.92 and hit the intra-day high of 1576.42 within the first fifteen minutes, thereafter, profit-taking activities dominated the floor and pushed the key index to the intra-day low of 1567.91, before some late buying of selected blue-chips helped lift the key index off low to close at 1570.04. Chart-wise, the FBM KLCI formed a bearish engulfing candlestick, a key reversal candlestick pattern, which indicates sellers were dominant throughout the day in pushing the key index lower. Hence, the FBM KLCI is likely to further consolidate itself. Immediate support is provided by the 10-day moving average (MA) at 1568, which looks fragile, and the pivot low at 1558.
MACD has turned downward, albeit still above its signal line, indicated a change in the direction of the momentum and possible further correction ahead. RSI (14) fell to 68.8 from 72.8, indicated the market strength is reducing. Stochastic is at 91.5 and has hooked downward, but is still above its slow stochastic line, reflected the correction of the key index. Signals from the indicators indicated possible further correction of the FBM KLCI in the near term.
The FBM KLCI has closed below the 5-day MA but is just above the 10-day MA. If the key index breaks below the 10-day MA, it is likely to slide further southward to the pivot support at 1558 and 1550. The underlying medium to longer term uptrend, nonetheless, is still very much intact. Immediate downside support zone is at 1566 to 1558 while the overhead resistance is at 1577. The market is likely to see more profit-taking activities over the next two weeks as players lock in their pre Chinese New Year “Ang-Pow”.
Overnight, the Dow rose +50.55 points or +0.43% to close higher at 11,837.93. Today, the FBM KLCI is likely to trade within a range of 1557 to 1585.
This week's expected range: 1542 – 1594
Today’s expected range: 1557 – 1585
Resistance: 1575, 1580, 1585
Support: 1557, 1562, 1566
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