Stocks on Bursa Malaysia closed mixed yesterday, on weaker buying momentum despite the positive sentiment on regional markets, as most Asian stocks rose yesterday, driven by the positive manufacturing data from the US and China. The benchmark FBM KLCI advanced 2.85 points or 0.18% to close at 1,606.63 after opening 3.35 points higher at 1,607.13. Decliners beat advancers by 379 to 354 while 344 counters were unchanged. Turnover was lower at 1.25 billion shares worth RM1.36 billion from the 1.44 billion shares worth RM1.4 billion on Monday.
Taking cue from the strong performance of Wall Street overnight, the FBM KLCI opened with an up gap of 3.35 points at 1,607.13 and surged to the intra-day high of 1,609.33 within the first five minutes of trading, charting another new intra-day record high for the FBM KLCI. The key index, however, retreated on profit-taking activity to the intra-day low of 1,604.76 before rebounding to close off low at 1,606.63, registering another new record close. Chart-wise, the FBM KLCI formed a bearish black spinning-top candlestick in a possible star position, and a down move of the key index today would produce a bearish evening star formation. The appearance of a black spinning-top at this high level showed that the market was hesitant to move further and profit-taking activity was dominant. Hence, there’s a high likelihood that the FBM KLCI may undergo a healthy pullback correction today.
MACD and its histogram continued to climb higher, indicating a continued improvement in the index’s momentum. RSI (14) was higher at 70.7, indicating a very bullish condition of the FBM KLCI. However, it has stepped into the short term overbought zone, and a correction may be expected ahead. Stochastic was higher at 97.3, indicating a very strong market strength and continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI is currently in a very bullish state, but is overbought, and is likely to pullback.
The underlying trend of the FBM KLCI remained up as the key index continue to stay above all the short, medium and long term moving averages. However, from a broader picture, an ending diagonal triangle (indicated by the trend lines in green) is in the forming, and a break below the lower support trend line may spell a possible trend change. Nevertheless, the FBM KLCI is likely to maintain its uptrend as of now until something strong enough to change its trend happened.
Overnight, the Dow fell -64.94 points or -0.49% to close at 13,199.55. Today, the FBM KLCI is likely to trade within a range of 1,599 to 1,614.
This week's expected range: 1571 – 1611
Today’s expected range: 1599 – 1614
Resistance: 1609, 1612, 1614
Support: 1599, 1602, 1604
Stocks to watch: AT, APFT, SWKPLNT, NOTION
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