Stocks on Bursa Malaysia ended lower yesterday weighed on by concerns over Europe’s debt issue, a downgrade of its credit rating, and the ability of the leadership there to solve the problem. The FBM KLCI declined 1.71 points or 0.12% to 1,465.39 after opening 4.19 points lower at 1,462.91. Market breath was negative with losers outpacing gainers by 386 to 343 while 315 counters were unchanged. Turnover was higher at 1.83 billion shares valued at RM1.38 billion from 1.595 billion shares worth RM1.129 billion on Monday.
Taking cue from the weak performance on Wall Street overnight, the FBM KLCI opened with a down gap of 4.19 points at 1,462.91 and slid to the intra-day low of 1,457.31 within the first five minutes. The key index rebounded and gradually moved higher for the rest of the day and touched the intra-day high of 1,467.52 before closing off high. Chart-wise, the FBM KLCI formed a white hammer candlestick, a bottom reversal candle pattern which indicates the bears were initially in control but the bulls later fought back and pushed up the index. Judging from the price action over the last three sessions, the FBM KLCI has found a temporary support around the 1,456-point level and may continue to consolidate above this support level. Nonetheless, the overall trend is still bearish bias, and if the key index breaks below the 1,456-point support level, it may plunge towards the next lower support of 1,450.
MACD continued to slide lower after making the dead-cross, indicating a continued loss in the market momentum and is short term bearish. As the MACD is still above the zero-line, current weakness may just be a short term correction. RSI (14) has hooked down marginally to 50.5, indicating a neutral position in terms of the short term relative strength. Stochastic continued to slide lower to 51.1, indicating a continued loss in the market momentum and the short term down cycle is intact. Readings from the indicators showed that the FBM KLCI is currently in a consolidation mode with a bearish bias.
The short term trend of the FBM KLCI remained down, and the medium term trend is sideways while the long term trend remained bearish. Immediate overhead resistance zone is at 1,468 to 1,476 posted by the short term 5, 10 and 30-day SMA, while the downside support zone is at 1,456 to 1,450. Judging from the volume and value traded, the overall market is likely to remain active with rotational play on the penny stocks while the FBM KLCI is likely to continue its consolidation. Overnight, the Dow fell -66.45 points or -0.55% to close at 11,954.94. Today, the FBM KLCI is likely to trade within a range of 1,449 to 1,478.
This week's expected range: 1410 – 1529
Today’s expected range: 1449 – 1478
Resistance: 1470, 1474, 1478
Support: 1449, 1453, 1459
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