Stocks on Bursa Malaysia finished lower yesterday as the market failed to sustain its upward momentum due to continuous selling pressure. Many investors were nibbling on cheap stocks when the benchmark index was hovering around 1,372.63 mid-afternoon but interest tapered off thereafter as most indices slipped into the negative territory in line with the trend in regional markets. The FBM KLCI finished 6.14 points or 0.4% lower at 1,361.38, after opening 5.36 points lower at 1,362.16. Decliners led advancers 368 to 298 while 271 counters were unchanged. Turnover rose to 795.03 million shares, valued at RM1.24 billion, from 631.32 million shares, worth RM1.14 billion, transacted on Monday.
Taking cue from the weak performance on Wall Street overnight, the FBM KLCI opened with a down gap of 5.36 points at 1,362.16 and slipped to the intra-day low of 1,356.77 within the first five minutes. The key index then recovered its lost ground gradually and touched the intra-day high of 1,375.02 at mid-afternoon before selling pressure brought it down to close at 1,361.38. Chart-wise, the FBM KLCI formed a Doji candlestick with a longer upper shadow and short lower shadow. The appearance of Doji indicates indecision of market direction. The short lower shadow indicates selling pressure was not very strong, while the longer upper shadow showed that there was some buying interest coming in to bargain hunt. Hence, the key index might take a pause here, and may move range-bound with immediate overhead resistance zone at 1,375 to 1,381, and the downside support zone at 1,356 to 1,350.
MACD was flat, indicating a pause in the momentum. Nonetheless, as the MACD is still below the zero-line and its signal-line, the overall picture is still bearish. RSI (14) was slightly lower at 33.5, remained in the bearish state. Stochastic was at 41.5, and has hooked downward, indicating the end of the recent short term up cycle. Readings from the indicators showed that the FBM KLCI is still in a bearish state, and the consolidation may prolong.
The main trend of the FBM KLCI remained down, and the key index is at a critical level now, as a break below the 1,350-point psychological support level will likely see the key index sliding lower to re-test the critical support zone of 1,310 to 1,300. In order to reverse the current downtrend, the FBM KLCI will have to at least move above the 1,420-point level. Overnight, the Dow rebounded +153.41 points or +1.44% to close at 10,808.71. Today, the FBM KLCI is likely to trade within a range of 1,335 to 1,393.
This week's expected range: 1274 – 1460
Today’s expected range: 1335 – 1393
Resistance: 1372, 1382, 1393
Support: 1335, 1346, 1353
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