Stocks on Bursa Malaysia ended in the negative territory yesterday amid weak market sentiment following concerns on the Euro zone debt crisis, as well as slowdown in the US and China has pressured the equities market. Renewed concerns over Euro zone’s crisis saw the Spanish 10-year government bond yield hitting a new high and forced Wall Street to finish weaker last Friday. At close, the FBM KLCI fell 6.83 points or 0.42% to 1,636.17 after fluctuated between 1,635.12 and 1,643.33 throughout the day. Decliners led advancers by 565 to 194 while 312 counters closed unchanged. Total volume fell to 915.89 million shares worth RM1.22 billion from 1.22 billion shares valued at RM1.72 billion last Friday.
Following the weak performance of Wall Street last Friday, the FBM KLCI opened 0.16 of a point lower at 1,642.84 and rebounded to the intra-day high of 1,643.33. However, profit-taking pressure sent it lower for the rest of the day with weak intermittent rebound to end near the low of the day. Chart-wise, the FBM KLCI formed a bearish black candlestick which indicates heavy selling pressure and served to confirm the top reversal signals appeared on last Thursday and Friday, and the benchmark index is likely to slip lower today with immediate downside support zone at 1,632 to 1,621.
MACD has turned downward, and the histogram also turned shorter, reflecting the pullback in the key index. Nevertheless, as the MACD line is still above its signal line, current weakness is viewed as only a pullback correction in an uptrend. RSI (14) was lower at 66.1 from 73.7 previously, which indicates weakening of the index’s short term relative strength, but is still in the bullish zone. Stochastic slipped lower to 85.1 from 93, and has crossed below the slow stochastic line, indicating the possible beginning of a short term down cycle. Readings from the indicators showed that correction on the FBM KLCI has just started, and is likely to extend until reversal signals are observed.
The FBM KLCI has started its correction after running up continuously for the last three weeks. It has closed below the 5-day SMA yesterday and is sitting right above the 10-day SMA which is currently at 1,633, and a break below the 10-day SMA is likely to see the FBM KLCI slipping further southward to the 20-day SMA support at 1,620. Nevertheless, the overall uptrend is still intact. Total volume has shrunk below the one billion shares mark yesterday, indicating a lack of interest from the investors, and the market is likely to further consolidate itself.
Overnight, the Dow fell -101.11 points or -0.79% to close at 12,721.46. Today, the FBM KLCI is likely to trade within a range of 1,624 to 1,651.
This week's expected range: 1612 – 1668
Today’s expected range: 1624 – 1651
Resistance: 1642, 1647, 1651
Support: 1624, 1630, 1633