FBM KLCI - pulled back on profit taking

Stocks on Bursa Malaysia closed on an easier note yesterday amid weak performance by financial stocks including RHB Capital, CIMB and Maybank. Sentiment on the broader market was weak, tracking the weaknesses in Asian stocks following overnight losses on Wall Street. The market was quiet amid lack of fresh buying interests on concerns over global growth after the Federal Reserve lowered forecast for US economic growth this year and 2012. The benchmark FBM KLCI fell by 4.16 points or 0.27% to close at 1,563.19. Losers led gainers by 393 to 330 while 308 were unchanged. Volume increased to 875.69 million shares valued at RM1.43 billion from 847.12 million shares valued at RM1.52 billion yesterday.

The FBM KLCI opened 1.31 points lower at 1,566.04 and rebounded to the intra-day high of 1,567.19, but profit-taking activities continued to pressed the key index to the intra-day low of 1,562.20 before closing off low at 1,563.19. Chart-wise, the FBM KLCI formed a bearish Harami candlestick pattern, which is a top reversal pattern. As it was mentioned yesterday, the bullish candlestick formed the day before could turn out to be a bull-trap, and it did. The key index has now retraced below the strong resistance level of 1,566, and may continue to consolidate below this level for the time being.

MACD was marginally higher, but the histogram was shorter, indicating a loss in the upward momentum. RSI (14) fell to 59.3, indicating the relative strength of the key index has turned mildly bullish from bullish. Stochastic is higher at 89.1, but is tapering off, indicating a gradual loss in market strength even though the short term up cycle is still intact. Readings from the indicators showed that the FBM KLCI is losing its upward momentum and may take a breather and consolidate itself.

The underlying trend of the FBM KLCI remained up. However, the upward momentum is not there, as can be seen from the average daily volume of around 820 million shares over the last two weeks. The overall market is likely to continue to drift sideways for a while. Immediate overhead resistance zone is at 1,566 to 1,577, while the downside support zone is at 1,560 to 1,550.

Overnight, the Dow fell -59.67 points or -0.49% to close at 12,050.00. Today, the FBM KLCI is likely to trade within a range of 1,556 to 1,573.

This week's expected range: 1529 – 1585
Today’s expected range: 1556 – 1573

Resistance: 1566, 1570, 1573
Support: 1556, 1559, 1561

Stocks to watch: EQUINE, DIJACOR, KURASIA

FBM KLCI - technical rebound

Stocks on Bursa Malaysia ended higher yesterday in a rotational play on heavyweights and lower liners while regional markets were largely mixed. The FBM KLCI rose 7.95 points or 0.54% to 1488.65, after opening higher by 3.04 points at 1483.74. Gainers led losers by 438 to 369 while 276 counters were unchanged. Volume jumped to 1.499 billion shares worth RM1.819 billion from Monday’s 1.33 billion shares worth RM1.61 billion.

The FBM KLCI rebounded to opened 3.04 points higher at 1483.74, and climb to the intra-day high of 1488.77 in early morning trade before profit-taking activities sent the key index down to its intra-day low of 1483.04. The late afternoon bargain hunting of selected heavyweights helped push the key index up to close near the day’s high at 1488.65. Chart-wise, the FBM KLCI formed a bullish Harami candlestick pattern, which indicates a counter-attack by the bull after falling for three consecutive days from the recent high of 1503.82. The key index has rebounded to close above its 10-day moving average (MA), however, is still below the 5-day MA which is currently at 1490.51, if the key index is able to break above this immediate resistance, then it might continue its up move to re-test the 1500 level.

MACD continued to slide lower, indicating an increased in the downward momentum. RSI (14) at 64.1 has hooked up, and is still in the bullish zone. Stochastic at 60.8 has continued its downward slide, indicating a continuation in the down cycle and the loss of market momentum. Mixed signals from the indicators are pointing toward a likely consolidation of the key index with a downward bias.

For the short term, The FBM KLCI is likely to be range-bound with a downward bias, while the medium to longer term uptrend still remained intact. Immediate overhead resistance zone is at 1490 to 1500, while the downside support zone is at 1480 to 1468.

Overnight, the Dow fell -165.07 points or -1.48% lower to close at 10,978.62. Today, the FBM KLCI is likely to trade within a range of 1479 to 1495.

This week's expected range: 1461 – 1524
Today’s expected range: 1479 – 1495

Resistance: 1491, 1493, 1495
Support: 1479, 1481, 1484

Stock to watch: MKLAND, EQUINE