Stocks on Bursa Malaysia closed lower yesterday on profit-taking, dampened by banking stocks amid weaker sentiments in the regional markets, as investors remained cautious due to the disappointed economic news from Europe and the United States. The benchmark FBM KLCI declined 7.36 points or 0.46% to close at 1,599.27 after fluctuating between 1,597.8 and 1,609.16 throughout the day. Decliners led advancers by 501 to 235 while 346 counters remained unchanged. Turnover was lower at 1.195 billion shares worth RM1.1 billion from Tuesday’s 1.25 billion shares worth RM1.36 billion.
The FBM KLCI opened 0.91 of a point higher at 1,607.54 and surged to the intra-day high of 1,609.16 within the first five minutes of trading. Thereafter, the key index slid lower for the rest of the day on heavy profit-taking activity to hit the intra-day low of 1,597.80 before rebounding slightly on bargain hunting activity to close off low. Chart-wise, the FBM KLCI formed a bearish black candlestick which indicates sellers were dominant for the day, and it also served to confirm the top reversal signal issued by the black spinning-top candlestick formed a day earlier. With the bearish down move yesterday, the FBM KLCI is likely to further correct downward today. Immediate downside support is envisaged at 1,591-point level, the 38.2% Fibonacci retracement level of the range from the pivot low of 1,562.97 on March 13th to the pivot high of 1,609.33 on April 3rd.
MACD has turned flat, whereas its histogram has turned slightly shorter, indicating a pause in the upward momentum. RSI (14) took a dip to 63.7 from 70.7 a day earlier, indicating a pullback of the short term relative strength to the bullish zone from the very bullish or overbought zone. Stochastic has hooked downward to 88.5 from 97.3 a day earlier, and has crossed below the slow stochastic line, reflecting the correction and the possible beginning of a short term down cycle. Readings from the indicators showed that the FBM KLCI is undergoing a correction, which is healthy after the recent strong run up to a new record high level.
The underlying uptrend of the FBM KLCI remains unchanged, while the current weakness is viewed as a healthy correction to the uptrend, and provided an opportunity to accumulate quality shares at a lower level. The immediate term target for the FBM KLCI at 1,620 to 1,625 and the medium term target of 1,675 to 1,700 remains unchanged for the time being until a confirmed trend change is observed.
Overnight, the Dow fell -124.80 points or -0.95% to close at 13,074.75. Today, the FBM KLCI is likely to trade within a range of 1,583 to 1,621.
This week's expected range: 1571 – 1611
Today’s expected range: 1583 – 1621
Resistance: 1607, 1614, 1621
Support: 1583, 1590, 1594
Stocks to watch: JCY, WELLCAL, MPAY
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