Stocks on Bursa Malaysia closed mostly lower yesterday on continued losses in blue-chips counters, as sentiment turned cautious amid news of China’s latest rate hike. The weak performance of the local market was also influenced by declines in regional Asian markets. However, gains in telecommunication counters such as Axiata and Maxis narrowed overall losses. The FBM KLCI declined 3.48 points or 0.23% to 1,536.07 after opening 2.08 points higher at 1,541.63. Losers beat gainers by 493 to 347 while 286 counters were unchanged. Total volume declined to 2.196 billion shares worth RM2.660 billion from Tuesday’s 3.178 billion shares worth RM2.736 billion.
The FBM KLCI opened 2.08 points higher at 1541.63 and surged to the intra-day high of 1541.98 within the first five minutes after market opened, heavy profit-taking activities that follow pushed the key index to the intra-day low of 1533.38, before bargain hunting on selected blue-chips helped push the key index to close off low at 1536.07. Chart-wise, the FBM KLCI formed a black hangman-like candlestick which confirmed the potential reversal signal issued by the black spinning-top candlestick formed a day earlier. With this candlestick pattern formation, the FBM KLCI is likely to correct further downward.
MACD has turned flat and is still below the zero-line, indicating weak momentum and continued bearish outlook for the FBM KLCI. RSI (14) is at 49.4 and has hooked downward, returning to the mildly bearish zone. Stochastic is at 44.6 and continued to climb higher, but is tapering off, indicating a slow down in the up cycle. Readings from the indicators show that the FBM KLCI is still in a relatively weak and mildly bearish condition for the short term, and hence may continue to drift sideways.
The short term trend of the FBM KLCI is currently sideways with a downward bias and is likely to consolidate further. The medium to long term uptrend, however, remained intact. Immediate overhead resistance zone is at 1541 to 1550, while the downside support zone is at 1532 to 1523. With the diminishing volume, the overall market is likely to turn slower in the near term.
Overnight, the Dow rose +6.74 points or +0.06% to close at 12,239.89. Today, the FBM KLCI is likely to trade within a range of 1523 to 1550.
This week's expected range: 1482 – 1567
Today’s expected range: 1523 – 1550
Resistance: 1541, 1546, 1550
Support: 1523, 1528, 1532
Stocks to watch: AEM, CBSTECH, EKOWOOD, RGB, MWE
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