Stocks on Bursa Malaysia closed on a softer note yesterday from selling activities, mainly in finance-related and small cap stocks. The weaker local bourse performance was an indication of its defensive stance unlike a steadier trend seen in the global equity markets in anticipation of an encouraging outcome from the Federal Reserve policymakers meeting later yesterday. The benchmark FBM KLCI closed 0.73 of a point lower at 1,564.02. Losers outnumbered gainers by 469 to 288 while 329 counters were unchanged. Total market volume dwindled to 1.163 billion shares worth RM1.471 billion from Monday’s close of 1.268 billion units valued at RM1.717 billion.
The FBM KLCI opened 0.09 of a point higher at 1,564.84 and surged to the intra-day high of 1,569.15 within the first thirty minutes after opening. Profit-taking activity which appeared pulled the key index off high and fluctuated in a sideways range. Some late selling activity further pushed the key index lower at close. Chart-wise, the FBM KLCI formed a black inverted hammer candlestick which is a bottom reversal candle pattern. However, as it is a black candlestick, the bear is still slightly dominant. Hence, the FBM KLCI may continue to consolidate or stage a rebound today. Immediate downside support is at 1,559 provided by the 30-day SMA.
MACD continued to slide lower, indicating a continued loss in momentum amid the consolidation process. RSI (14) was marginally lower at 52.1 and is tapering off, indicating a slow down in the downward move, and the short term relative strength is neutral with a bullish bias. Stochastic continued to plunge lower to 39.5, indicating a continued weakening of the market strength and the short term down cycle is still in continuation. Readings from the indicators showed that the FBM KLCI is still in consolidation and the process may extend.
The short term trend of the FBM KLCI is down as the key index is closing below the short term 5, 10 and 20-day SMA. Nevertheless, the medium and longer term trend is still up. Immediate downside support zone is at 1,562 to 1,549 with a critical support level at 1,559 provided by the 30-day SMA, and a break below this support level will likely see the FBM KLCI turning more bearish. With the overall volume continued to shrink, the market is likely to further consolidate itself.
Overnight, the Dow rallied +217.97 points or +1.68% to close at 13,177.68. Today, the FBM KLCI is likely to trade within a range of 1,555 to 1,576.
This week's expected range: 1547 – 1617
Today’s expected range: 1555 – 1576
Resistance: 1568, 1572, 1576
Support: 1555, 1559, 1561
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