FBM KLCI - marginally higher

Stocks on Bursa Malaysia closed mixed yesterday due to the lack of direction, which kept the market quiet throughout the trading day. The FBM KLCI was 0.78 of a point better at 1,583.17, after opening 0.61 of a point lower at 1,581.78 and it moved between 1,579.53 and 1,584.15. Losers led gainers by 390 to 344 while 325 counters were unchanged. Turnover decreased to 1.295 billion shares worth RM1.214 billion from Wednesday’s 1.334 billion shares valued at RM1.434 billion.

Taking cue of the weakness on Wall Street overnight, the FBM KLCI opened 0.61 of a point lower at 1,581.78 and slipped lower to the intra-day low of 1,579.53, it rebounded from there and moved higher gradually to touch the intra-day high of 1,584.15 before ending off high. Chart-wise, the FBM KLCI formed a small white spinning-top candlestick which indicates indecision of market direction with an upward bias. The FBM KLCI is likely to take a pause at this level before making attempt to move higher. Immediate strong overhead resistance zone is at 1,586 to 1,590 while the downside support zone is at 1,579 to 1,566.

MACD was almost flat, but its histogram was turning shorter upward, indicating a waning of the bearish momentum. Nevertheless, as the MACD is still below the zero line, the bear threat is not over yet. RSI (14) was marginally higher at 48.8, reflecting the mild gain of the index, and indicated a mildly bearish condition of the FBM KLCI. Stochastic continued to move higher to 31.9 after crossing over its slow stochastic line, indicating an improvement in the index’s strength and continuation of the short term up cycle which could be just part of a technical rebound. Readings from the indicators showed that the FBM KLCI is still mildly bearish and may continue to consolidate unless more positive signals are seen.

The short term trend of the FBM KLCI remained down as it is still trapped within the immediate downtrend channel. The current downtrend would only be reversed if the FBM KLCI is able to close above the 1,590-point level and continue to move higher. The medium term trend is neutral as the key index is current just sitting above the 50-day SMA. The longer term trend, nevertheless, still remained up. With the overall volume remained on the low side in the 1.2 billion shares region, the market is likely to remain in a consolidation mode with rotational play on the penny stocks.

Overnight, the Dow fell another -61.98 points or -0.47% to close at 13,206.59. Today, the FBM KLCI is likely to trade within a range of 1,575 to 1,589.

 
This week's expected range: 1532 – 1618
Today’s expected range: 1575 – 1589

Resistance: 1585, 1587, 1589
Support: 1575, 1577, 1580