Stocks on Bursa Malaysia closed lower yesterday on across-the-board selling pressure in key blue-chip counters with the FBM KLCI losing 7.65 points or 0.48% to close at 1,594.24. Persistent selling has been evident in the market since the day before and even the listing of Felda Global Ventures Holdings Bhd (FGVH), the world’s second largest initial public offering (IPO), could not help prop it up. Losers led gainers by 476 to 248 while 306 counters were unchanged. Turnover rose to 1.563 billion shares valued at RM2.741 billion from the 1.179 billion valued at RM1.631 billion on Wednesday.
The FBM KLCI opened 0.52 point higher at 1,602.41 and surged to the intra-day high of 1,602.98 within the first minute after opening, and heavy profit-taking activity sent the key index down to the intra-day low of 1,591.85 at mid morning before rebounding to move sideways. Chart-wise, the FBM KLCI formed a bearish engulfing candlestick which indicates heavy selling pressure on profit-taking, and the key index is likely to fall further or consolidate itself today. Immediate downside support zone is at 1,591 to 1,581 while the resistance zone is at 1,602 to 1,611.
MACD has hooked downward slightly while its histogram has turned shorter, indicating a continued loss in the key index’s momentum. Nevertheless, as the MACD is still above the signal-line, the current weakness is viewed as a correction is a bull market. RSI (14) slipped lower to 56.4 from 61.7 previously, indicating the short term relative strength has turned mildly bullish from bullish. Stochastic was lower at 64.8, indicating further loss in market strength and a continuation of the short term down cycle. Readings from the indicators showed that the FBM KLCI is undergoing a short term correction, and is likely to further consolidate itself.
The short term trend of the FBM KLCI has again turned weak as the index is currently closing below the short term 5 and 10-day SMA, and is likely to slip lower to the next support level provided by the 20-day SMA at 1,583. Nevertheless, the medium and longer term uptrend still remained intact. As the market is coming to a mid-year closing today, some window dressing activity is expected which might give some support to the key index.
Overnight, the Dow fell -24.75 points or -0.20% to close at 12,602.26. Today, the FBM KLCI is likely to trade within a range of 1,578 to 1,614.
This week's expected range: 1559 – 1636
Today’s expected range: 1578 – 1614
Resistance: 1601, 1608, 1614
Support: 1578, 1585, 1589
Stocks to watch: MISC, TAMBUN, HOHUP, IJACOBS, PENERGY