Stocks on Bursa Malaysia closed lower yesterday as jittery investors continued to reduce their holdings, especially in heavyweights after Fitch Ratings revised its outlook for Malaysian public debt to “negative” from “stable”. The global rating agency made the call as the country’s debt increased to 53.3% of gross domestic product (GDP) last year. The FBM KLCI dropped 22.46 points or 1.25% to end at 1,772.62 after moving between 1,770.44 and 1,791.71 throughout the day. Market breadth was negative with losers led gainers by 753 to 131, while 243 were unchanged. Volume fell to 1.918 billion shares valued at RM3.056 billion from 2.145 billion shares valued at RM2.072 billion on Tuesday.
The FBM KLCI opened lower with a downside gap of 3.56 points at 1,791.52 and fell on heavy selling pressure to hit the intra-day low of 1,770.44, losing 24.64 points at its worst, before rebounding slightly on bargain hunting to close off low. Chart-wise, the FBM KLCI formed a bearish long black candlestick which indicates the bears or sellers were in full control for the day in driving the key index lower. The downside runaway gap at the opening also showed that sellers were rushing out to cash out their position. Hence, the FBM KLCI is likely to continue sliding lower if the bearish sentiment remains. Immediate downside support zone is at 1,762 to 1,750, while the overhead resistance zone is at 1,791 to 1,800.
MACD continued to slide lower and has made a dead-cross over the signal-line, issuing a sell signal. RSI (14) fell to 42.7 from 56.9, indicating the key index has turn bearish from a mildly bullish state. Stochastic was lower at 43.5 from 73.3, indicating a rapid weakening of the key index and continuation of the short term down cycle. Readings from the indicators showed that the FBM KLCI has turned bearish for the short term, and the bearish momentum is likely to drive the key index lower.
The short term trend of the FBM KLCI has turned bearish or down as the key index has closed below the 30, 50 and 60-day SMA at the same time, signalling a very strong bearish downward move, and the possible beginning of a major correction has started. The FBM KLCI is likely to slide lower to test the psychological support of 1,750 follow by the critical support of 1,723, and a break of the critical support of 1,723 could see the FBM KLCI sliding lower to test the all important psychological support of 1,700. Nevertheless, the long term trend still remained up at the moment.
Overnight, the Dow fell -21.05 points or -0.14% to close at 15,499.54. Today, the FBM KLCI is likely to trade within a range of 1,743 to 1,812.
This week's expected range: 1785 – 1826
Today’s expected range: 1743 – 1812
Resistance: 1786, 1799, 1812
Support: 1743, 1756, 1764