Stocks on Bursa Malaysia ended
lower yesterday in line with regional trend where shares were down, reacting
negatively to developments in the global front. Wall Street’s equity
bellwethers slumped between 1.3% and 2.2% last Friday, following the release of
a much weaker-than-expected job data. A blurry progress on the Eurozone debt
saga further dented investors’ sentiments after the results of elections in France and Greece showed public discontent
with the austerity measures taken to tackle the crisis. The FBM KLCI fell 6.17
points or 0.39% to 1,584.87, after having opened 5.87 points lower at 1,585.17.
Losers led gainers by 540 to 208 while 305 counters were unchanged. Turnover
fell to 963.02 million shares valued at RM1.194 billion from 1.33 billion
shares valued at RM1.59 billion on last Friday.
Taking cue from the weak performance of Wall Street last
Friday, the FBM KLCI opened with a down gap of 5.87 points and slipped lower to
the intra-day low of 1,579.74. It rebounded at late morning and moved sideways,
and a last minute buying of selected blue-chips pushed the key index to close
near the high of the day. Chart-wise, the FBM KLCI formed a dragon-fly Doji
candlestick which indicated the bears were initially dominant but later the
bulls fight back to lift the key index off low. The appearance of a dragon-fly
Doji after a gap down indicated the market was reluctant to go lower, and hence
might rebound to move higher. Immediate overhead resistance is at 1,591 while
the downside support is at 1,579.
MACD continued to climb higher even though is still below
the zero-line, and the histogram also turned shorter upward, indicating a
continued reduction of the bearish momentum. RSI (14) hooked downward to 49.8,
indicating the short term relative strength is currently neutral with a mild
bearishness. Stochastic continued to move higher to 54.1 from 50.8, indicating
the short term up cycle is still intact. Mixed readings from the indicators
showed that the FBM KLCI is in a consolidation mode with an upward bias.
With the pullback yesterday, the short term trend of the FBM
KLCI remained down, and this has made last week’s four consecutive days of
rebound a possible technical rebound in a larger downtrend. Putting it in the
Elliott Wave term, it could be the ‘B’ wave of an A-B-C, and if the key index
continues to move lower below the critical support of 1,566, it might have a possible
downside target of 1,548 to 1,521. On the other hand, in order for the FBM KLCI
to reverse the bearish scenario, it has to close above 1,591 or higher.
Nevertheless, the longer term trend is still up. With the total volume dwindled
to below one billion shares, the market is likely to continue to consolidate.
Overnight, the Dow fell a marginal -29.74 points or -0.23%
to close at 13,008.53. Today, the FBM KLCI is likely to trade within a range of
1,575 to 1,592.
This week's expected range: 1553 – 1614
Today’s expected range: 1575 – 1592
Resistance: 1587, 1590, 1592
Support: 1575, 1577, 1581
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