Stocks on Bursa Malaysia closed broadly lower yesterday in cautious trading, with losses mostly seen in heavyweight stocks. The local market was also dragged down by negative sentiments among investors globally, tracking Wall Street’s overnight heavy losses. However, late buying interest from domestic funds helped cushion the market’s main index. The FBM KLCI fell 4.46 points or 0.27% to 1,641.07 after moving between a range of 1,632.04 and 1,644.1. Losers led gainers by 458 to 218, while 343 counters were unchanged. Volume fell to 999.664 million shares worth RM1.492 billion from Wednesday's 1.207 billion shares valued at RM1.709 billion.
Taking cue from the weak performance of Wall Street overnight, the FBM KLCI opened with a down gap of 3.72 points at 1,641.81 and slipped lower to hit the intra-day low of 1,632.04 at noon, losing 13.49 points at its worst. The key index rebounded in the afternoon session which narrowed down the losses at close. Chart-wise, the FBM KLCI formed a black hammer candlestick pattern which indicates buying support for the key index after piercing through the 50% Fibonacci retracement level at 1,637, and the index is likely to further consolidate itself at around current level.
MACD and its histogram continued to slide lower, indicating a continued increase in the bearish momentum. The MACD has fallen to a critical level as it is now just slightly above the zero-line, and a break below the zero-line would signify the key index turning bearish for the medium term. RSI (14) was lower at 37.6, indicating the FBM KLCI has entered a bearish state. Stochastic, however, has hooked upward slightly to 18.4 after touching 16.7, giving out the first sign of a possible rebound. Readings from the indicators showed that the FBM KLCI is generally weak and bearish for the short term, however, a possible rebound might be expected as the stochastic is in the short term oversold level and has shown a mild reversal.
The short term trend of the FBM KLCI remained down and bearish, and the medium term trend is also beginning to turn bearish as the index has already closed below the 50 and 60-day SMA. The longer term trend as represented by the 100 and 120-day SMA is still up at the moment. The down move yesterday actually tested the 100-day SMA support, which is currently at 1,636, and rebounded from it. A further break of the this 100-day SMA support level which coincided with the 50% Fibonacci retracement level would likely see the FBM KLCI sliding lower to the 1,627 and 1,615 support zone. The critical long term 120-day SMA support is now at 1,624, and a close below this level would really spell bear for the FBM KLCI.
Overnight, the Dow fell another 121.41 points or -0.94% to close at 12,811.32. Today, the FBM KLCI is likely to trade within a range of 1,621 to 1,656.
This week's expected range: 1625 – 1702
Today’s expected range: 16321 – 1656
Resistance: 1646, 1651, 1656
Support: 1621, 1627, 1634