Stocks on Bursa Malaysia ended weaker yesterday as investors were reluctant to take up new positions but the underlying benchmark FBM KLCI remained in positive territory, aided by interest in selected heavyweights. The key index closed 1.98 points or 0.13% higher at 1,491.25, after opening 4.13 points better at 1,493.40 in the morning. Decliners outnumbered advancers by 626 to 228 while 223 counters were unchanged. Total volume declined to 1.16 billion shares valued at RM2.04 billion, from the 1.39 billion shares worth RM1.79 billion, recorded on last Friday.
The FBM KLCI opened 4.13 points higher at 1,493.40 but plunged to the intra-day low of 1,474.38 within the first thirty five minutes, and rebounded from there to the intra-day high of 1,493.96 before late afternoon profit-taking pressed the key index to close off high in the positive territory. Chart-wise, the FBM KLCI formed a bullish hammer candlestick pattern which indicates initial sell down on fear but buying support later came in to lift the key index higher. The key index has now tested the critical support at 1,474 and rebounded, but the trend is still down. It will need to climb back at least to above the psychological level of 1,500 in order for the sentiment to turn better.
MACD continued to slide lower indicating the downward momentum is still dominant. RSI (14) has hooked up slightly to 36.7, but is still in the bearish zone. Stochastic continued to slide lower into the short term oversold zone at 9.4, and a rebound is likely to happen soon. Readings from the indicators showed that the FBM KLCI is still very weak; however, as the stochastic oscillator shows a deeply oversold condition, a rebound can happen anytime.
The FBM KLCI is currently on a downtrend as it is now below its short, medium and long term moving averages. Technically, in order to reverse the downtrend, it will need to climb above 1,530 in the near term, otherwise, the chances of visiting lower lows is still there. Cautious sentiment is expected to continue to rule in the near term, nonetheless, this could be a good time to accumulate quality shares with good earnings at lower price level.
Overnight, the Dow rose +95.89 points or +0.79% to close at 12,226.34. Today, the FBM KLCI is likely to trade within a range of 1459 to 1514.
This week's expected range: 1438 – 1540
Today’s expected range: 1459 – 1514
Resistance: 1499, 1506, 1514
Support: 1459, 1467, 1479
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