FBM KLCI - sign of toppishness

Stocks on Bursa Malaysia ended mixed yesterday with the FBM KLCI touching a record intra-day high of 1,611.50 after opening 0.36 of a point easier at 1,602.71, but ended only 0.05 of a point higher at 1,603.12 on heavy profit-taking activity. The benchmark index performed quite well in contrast to regional market performances as it held up firmly, not giving up all gains on window dressing. Gainers led losers 371 to 360 while 337 counters were unchanged. Turnover eased to 1.072 billion shares worth RM1.250 billion from last Friday’s 1.478 billion shares worth RM1.703 billion.

The FBM KLCI opened 0.36 point lower at 1,602.71 and slipped to the intra-day low of 1,601.10 within the first ten minutes after opening, it then rebounded strongly and rallied to a new record intra-day high of 1,611.50 but gave back much of its gains on heavy profit-taking activity to close almost unchanged. Chart-wise, the FBM KLCI formed a white spinning-top candlestick with a long upper shadow which indicates a bullish euphoria initially in pushing the key index higher, but was later hammered by the bears. It also indicated heavy resistances at the historical high region of 1,609. With the price action yesterday, the key index is likely to consolidate itself first before staging another attempt to re-test the historical high level.

MACD was higher but its histogram turned slightly shorter, indicating a reduction in the upward momentum, and an inherent weakness is building up. RSI (14) was flat at 64.7, indicating an unchanged condition of the short term relative strength. Stochastic slipped lower to 87.2 from 92.7, and has crossed below the slow stochastic line, indicating a possible beginning of a short term correction. Readings from the indicators showed that the FBM KLCI is taking a breather after the recent up move and is likely to consolidate itself for the immediate short term.

The uptrend of the FBM KLCI remained intact as the key index is still closing above all the moving averages. However, the immediate short term 5-day SMA is just 1.76 points lower at 1,601.39, giving the key index an immediate support. If the key index slipped below this immediate 5-day SMA support, it is likely that it will slide lower to the immediate support zone of 1,594 to 1,589. Judging from the dwindling volume, the overall market is likely to further consolidate itself.

Overnight, the Dow tumbled -138.12 points or -1.09% to close at 12,502.66. Today, the FBM KLCI is likely to trade within a range of 1,588 to 1,622.

This week's expected range: 1559 – 1636
Today’s expected range: 1588 – 1622

Resistance: 1610, 1616, 1622
Support: 1588, 1594, 1599

Stocks to watch: CANONE, PADINI, HSL, YTLPOWR