Stocks on Bursa Malaysia closed lower yesterday in line with weaknesses on regional markets plagued by fears of slowing global economic growth and amid the ongoing euro zone debt crisis. Investors were also adopting a cautious “wait-and-see” attitude ahead of the tabling of next year’s budget on Friday. The FBM KLCI lost 11.32 points or 0.7% to 1,612.38 after opening 9.35 points lower at 1,614.35. Losers led gainers by 571 to 183 while 302 counters were unchanged. Turnover decreased to 827.15 million shares worth RM1.351 billion from last Friday's 1.075 billion shares worth RM1.911 billion.
The FBM KLCI opened with a down gap of 9.35 points at 1,614.35 and plunged to the intra-day low of 1,595.85 within the first fifteen minutes of trading. The key index lost 27.85 points at its worst but rebounded to gradually regain some lost ground. Chart-wise, the FBM KLCI formed a black hammer candlestick with long lower shadow, a bottom reversal candle, and a downside continuation gap which indicates market players were selling out on fear initially but bargain-hunters came in and lifted the key index to close off low, and the FBM KLCI might continue to consolidate today. Immediate overhead resistance zone is the gap area of 1,616 to 1,619 while the immediate downside support zone is at 1,605 to 1,595.
MACD and its histogram continued to slide southward, indicating an increased in the bearish momentum. RSI (14) was lower at 38.6 from 43.7, indicating a further loss of the short term relative strength and the key index has moved into the bearish zone. Stochastic plunged lower to 37.6 from 56.3, indicating the continuation of the short term down cycle and further weakening of the key index. Readings from the indicators showed that the FBM KLCI is turning bearish and is likely to further consolidate.
The short and medium term trend of the FBM KLCI has turned bearish and is down, while the long term trend is under challenge now. The key index actually pierced through the 120-day SMA and the all important 1,600-point psychological support yesterday but rebounded strongly to close above the support level of 1,611, indicating there are strong buying support for the key index at the 1,600-point level. However, as the downtrend has already formed, the FBM KLCI is likely to slip lower to the long term support zone of 1,555 to 1,543 in time to come. As of now, any rebound should be taken as an opportunity to cash out.
Overnight, the Dow fell 20.55 points or -0.15% to close at 13,558.92. Today, the FBM KLCI is likely to trade within a range of 1,580 to 1,636.
This week's expected range: 1578 – 1685
Today’s expected range: 1580 – 1636
Resistance: 1620, 1628, 1636
Support: 1580, 1587, 1600