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Tuesday, July 10, 2012

FBM KLCI - taking a breather


Stocks on Bursa Malaysia closed slightly easier yesterday on profit taking after a record high last Friday and coupled with a soft external markets performance. Investors were hesitant to take any major position in the market; on jitters over external woes following a weaker than expected jobs data in the United States. However, gains in some blue-chip counters helped the local bourse stay above the 1,615 level. The FBM KLCI shed 0.24 of a point to close at 1,620.31 after moving between 1,616.24 and 1,620.54. Losers led gainers by 423 to 319 while 333 counters were unchanged. Turnover increased to 1.266 billion shares worth RM1.293 billion from the 1.14 billion shares worth RM1.52 billion last Friday.

Taking cue from the weak performance of Wall Street last Friday, the FBM KLCI opened 1.2 points lower at 1,619.35 and slipped to the intra-day low of 1,616.24 within the first thirty minutes of trading on mild selling pressure, and the key index rebounded to move sideways before some last minutes buying lifted it to close almost unchanged. Chart-wise, the FBM KLCI formed a white hanging-man candlestick, a top reversal candlestick pattern which indicates the appearance of selling pressure especially when it appeared at the high level. Hence, the FBM KLCI is likely to further consolidate before continuing its northward move. Immediate downside support zone is at 1,616 to 1,611

MACD continued to climb higher but the histogram was slightly shorter, indicating a small reduction in the upward momentum. RSI (14) hooked gently downward to 68.3 from 68.5 and the short term relative strength is still in the bullish zone. Stochastic was higher at 99.4 but is tapering off, indicating a mild reduction in the upward strength. Readings from the indicators reflected the mild pulled back in the key index yesterday, but the overall momentum is still bullish.

The trend of the FBM KLCI remained bullish and up as the key index is still above all the moving averages. After recording new highs continuously last week, the FBM KLCI is likely to pause for a breather before continuing its uptrend, and a pullback will offer opportunity to buy into quality shares at lower price level. Overall volume remained thin, and rotational play on second and third liners is likely to continue dominating the active scene.

Overnight, the Dow fell another -36.18 points or -0.28% to close at 12,736.29. Today, the FBM KLCI is likely to trade within a range of 1,613 to 1,625.

This week's expected range: 1585 – 1641
Today’s expected range: 1613 – 1625

Resistance: 1621, 1623, 1625
Support: 1613, 1615, 1617

Stocks to watch: MPHB, SUPERMX, BIMB,UOADEV, CATCHA

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