Stocks on Bursa Malaysia closed broadly lower on cautious trading yesterday, amid concerns over the extent of China's economic slowdown. The local market is likely to remain in consolidation mode in the near-term, given the limited investor participation during the school holidays as most market players remained on the sidelines. The FBM KLCI, however, rose 3.67 points or 0.23% to close at 1,579.38, reflecting investors' appetite towards high-price blue chip stocks, which were more defensive. Decliners led advancers by 443 to 296 while 367 counters were unchanged. A total of 1.359 billion shares, worth RM1.731 billion, changed hands compared with 1.273 billion shares, worth RM1.845 billion, registered on Wednesday.
The FBM KLCI opened 0.32 point higher at 1,576.03 and surged to the intra-day high of 1,579.45 within the first thirty minutes. The key index reversed its uptrend on profit-taking activity to touch the intra-day low of 1,574.59, and it rebounded to climb higher gradually for the rest of the day to end near the day’s high. Chart-wise, the FBM KLCI formed a bullish small white candlestick which indicates a continuation of the uptrend resulted from the reversal two days ago. The key index is likely to continue its upward move today with immediate overhead resistance envisaged at 1,582-point level, and a break above this level is likely to see the FBM KLCI moving higher to re-test the recent high of 1,594.72 registered on 5th March.
MACD was marginally lower and is tapering off, while the histogram continued to turn shorter upward, indicating a reduction in the bearish momentum. RSI (14) was higher at 60.4, indicating the short term relative strength has improved to the bullish level. Stochastic has reversed up to 48.5 and crossed above the slow stochastic line, indicating a possible change in the short term market cycle from down to up. Readings from the indicators showed that the short term correction of the FBM KLCI is probably over and may continue to move higher.
The FBM KLCI has again regained its short term uptrend as it closed above the all the short term moving averages yesterday, while the medium and longer term uptrend still remained intact. Immediate overhead resistance zone is at 1,582 to 1,594 while the immediate downside support zone is at 1,574 to 1,562. With the overall volume remained weak, the general market is likely to remain sluggish and the focus may continue to be on the defensive blue-chip stocks.
Overnight, the Dow rose +58.66 points or +0.44% to close at 13,252.76. Today, the FBM KLCI is likely to trade within a range of 1,571 to 1,585.
This week's expected range: 1547 – 1617
Today’s expected range: 1571 – 1585
Resistance: 1581, 1583, 1585
Support: 1571, 1572, 1576
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