FBMKLCI

Stocks on Bursa Malaysia closed marginally lower yesterday despite the overnight uptrend on Wall Street and other regional bourses. Major Asian bourses were traded higher, led by Japan's Nikkei, as positive sentiment emerged following an improved reading of China's manufacturing sector and the US Federal Reserve's minutes reinforced expectations the central bank will not rush to raise interest rates. However, the FBMKLCI continued its correction for the third consecutive sessions to close 1.91 points or 0.10% lower at 1,875.12, after fluctuating between 1,871.50 and 1,882.28 throughout the day. Decliners outpaced advancers by 402 to 390, with 340 counters unchanged. Volume decreased to 1.8 billion shares worth RM2.23 billion, from 1.88 billion shares worth RM1.95 billion transacted on Wednesday.

Taking cue from the strong close on Wall Street overnight, the FBMKLCI opened 1.06 points higher at 1,878.09 and surged to the intra-day high of 1,882.28 within the first fifteen minutes. However, the up thrust was truncated by profit-taking activity which sent the key index southward for the rest of the day to hit the intra-day low of 1,871.50 before a last minute rebound which lifted it to close off low. Chart-wise, the FBMKLCI formed a black spinning-top candlestick which indicates uncertainty and consolidation. Hence, the FBMKLCI is likely to continue to consolidate today. Immediate overhead resistance zone is at 1,882 to 1,889, while the downside support zone is at 1,871 to 1,867.

MACD and its histogram continued to slide lower, indicating further loss in momentum. Nonetheless, as MACD is still above the signal-line, current weakness is considered just a short term correction. RSI (14) was lower at 57.7 from 59.6, indicating mild loss in the index’s relative strength. Stochastic slipped lower to 57.9 from 79.1, indicating further weakening of the key index and continuation of the short term down cycle. Readings from the indicators showed that the FBMKLCI is undergoing a short term correction phase, and the correction and consolidation process is likely to extend until a confirmed reversal signal is seen.

The immediate near term trend of the FBMKLCI is down as the key index is now closing below the 5 and 10-day SMA. The price action of the FBMKLCI yesterday showed that the key index is finding support at 1,871-point level, and is likely to consolidate around this support level. However, a further break of the immediate support will likely see the key index sliding lower to the 30-day SMA support level currently at 1,864. Nevertheless, the short, medium and long term trend is still up, and hence, current weakness should be viewed as an opportunity to accumulate quality shares for longer term gains.

Overnight, the Dow rose 10.02 points or 0.06% to close at 16,543.08. Today, the FBM KLCI is likely to trade within a range of 1,859 to 1,893.

This week's expected range: 1852 – 1902
Today’s expected range: 1859 – 1893

Resistance: 1881, 1887 1893
Support: 1859, 1865, 1870