Stocks on Bursa Malaysia closed mostly lower yesterday, weighed by losses in heavyweights, with sentiment remaining cautious over high oil prices, and questions remained as to whether the European Central Bank’s second liquidity injection could resolve the Eurozone debt crisis. The FBM KLCI ended 2.31 points lower at 1,556.73, after opening 3.09 points higher at 1,562.13. Losers led gainers by 511 to 309 while 309 counters were unchanged. Turnover was higher at 1.727 billion shares worth RM1.588 billion, from 1.642 billion shares, worth RM1.633 billion transacted on Monday.
The FBM KLCI opened 3.09 higher at 1,562.13 and slid lower throughout the day and hit the intra-day low of 1,552.62 at late afternoon before rebounding to close off low. Chart-wise, the FBM KLCI formed a bearish black candlestick with long lower shadow which is a confirmation to the top reversal signal produced by the black inverted hammer candlestick formed on Monday. This indicated that the market was under selling pressure, but there are buying supports when it comes down to the support level. Nevertheless, the FBM KLCI is still trapped in the consolidation range and formed a rectangle shape chart pattern.
MACD was lower, indicating a continued loss in the market momentum. Nonetheless, as it is still above the zero-line, the current weakness is viewed as just a correction in a bull market. RSI (14) slid lower to 59.6, indicating a continued loss in the short term relative strength of the key index, and has now moved into the mildly bullish zone from the bullish zone previously. Stochastic slid lower to 69.1, also indicated that the key index is losing its strength and the short term down cycle is in continuation. Readings from the indicators showed that the FBM KLCI is losing its momentum and is poised to further consolidate. Nevertheless, it has not turn bearish yet.
The short term trend of the FBM KLCI remained sideways while the medium and longer term trend is still up. Immediate over resistance zone is at 1,567 to 1,577 while the immediate downside support zone is at 1,553 to 1,540, with 1,549 being the critical support level. A break below the 1,549-point level will likely see the FBM KLCI sliding lower to the 1,540 and 1,530 zone. The volume registered reflected the consolidation mode of the index-link counters but the penny stocks were still in active rotational play.
Overnight, the Dow rose +23.61 points or +0.18% to close at 13,005.12, the first time since financial crisis. Today, the FBM KLCI is likely to trade within a range of 1,542 to 1,573.
This week's expected range: 1541 – 1577
Today’s expected range: 1542 – 1573
Resistance: 1562, 1567, 1573
Support: 1542, 1547, 1552
Stocks to watch: ZELAN, HSL, KIANJOO
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