Stocks on Bursa Malaysia came under selling pressure yesterday. The decline was in line with the fall across Asian bourses, and lower commodity prices in anticipation that China will initiate liquidity tightening measures that could curb growth in the world's third-largest economy. The FBM KLCI fell 12.45 points to the intra-day low of 1,298.75 points before closing slightly higher at 1,299.67 points for an 11.53 points or 0.88% loss. Decliners led advancers by 461 to 211 while 240 counters were unchanged. Volume stood at 764 million shares worth RM1.098 billion.
Technically, the FBM KLCI’s move to close its gap formed last Monday was anticipated when we mentioned in last Friday’s reports that “the FBM KLCI looks a little congested at the current level of 1320 to 1330 as the candlesticks had been overlapping for the last four day, it could be a sign of distribution”, it might come down to close the gap, and it did just that.
The FBM KLCI had for the short term made a top reversal when it breaks below the short term 5 and 10-day moving averages. The formation of a bearish long black candlestick indicated strong selling pressures on the benchmark index; nonetheless, the index may find some support at the 1300 psychological level, if it does not, then the fall might continue to the 1280 level in the short term.
MACD has turned downward, and the histogram too has turned shorter indicating a reduction in the upward momentum and a change in the short term uptrend of the index into a correction mode. RSI(14) at 55.64 has turned weak and moved into the neutral zone from the bullish zone. Stochastic at 64.47 has come below its 80 level indicating the beginning of another short term down cycle.
Today, the FBM KLCI is likely to trade within a range of 1280 to 1318.
This week's expected range: 1277 – 1359
Today’s expected range: 1280 – 1318
Resistance: 1304, 1309, 1318
Support: 1280, 1290, 1295
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