Stocks on Bursa Malaysia closed lower yesterday led by blue-chips and heavyweights, amid weak global sentiment. Asian stock prices came under fresh heavy selling yesterday, with currencies from India to Indonesia in freefall as foreign funds continued to flee emerging markets on worsening economic outlook and escalating violence in Syria. Investors' frayed nerves rattled amid rising threat of possible unilateral military strike on Syria by Western powers. The FBM KLCI dipped below the 1,700 points level for the first time since May during intra-day trade before it settled 21.25 points or 1.2% lower at 1,701 points. The local benchmark has fallen by 100 points this month alone. Losers hammered gainers by 990 to 73, with 135 counters unchanged. Turnover rose to 2.29 billion shares worth RM2.68 billion against 1.50 billion shares worth RM1.76 billion on Monday.
Taking cue from the weak performance of the Dow overnight, the FBM KLCI opened lower with a downside gap of 4.08 points at 1,718.41 and slipped lower for the rest of the day with weak intermittent rebound. The key index hit an intra-day low of 1,698.89 right after lunch break, losing 23.6 points at its worst, before recovering slightly to close off low. Chart-wise, the FBM KLCI formed a bearish long black candlestick which indicates heavy selling pressure for the day, and the key index is likely to fall further if the selling continues into today. Immediate downside support is at 1,698, follows by 1,685 and 1,675, while the immediate overhead resistance zone is at 1,719 to 1,722.
MACD and its histogram continued to extend southward, indicating an increase in the bearish momentum. RSI (14) was lower at 20.9 from 25.7, indicating the short term relative strength of the FBM KLCI has turned very bearish and is oversold. Stochastic was lower at 8.98 from 12.2, indicating further weakness in the key index and continuation of the down cycle. Readings from the indicators showed that the FBM KLCI is currently in a very weak and bearish state, and the weakness is likely to continue until a strong bottoming signal is seen.
The trend of the FBM KLCI is currently down and bearish as it is staying below most of the short, medium and long term moving averages, and is sliding lower to test the support of the longer term moving averages. The key index pierced through the 200-day long term moving averages yesterday and rebound to sit on it, and a further break of this 200-day SMA will trigger further selling pressure which will push the index to test the 240, 300 and 360-day SMA support which is currently at 1,692, 1,678 and 1,661, and a close of the FBM KLCI below the 360-day SMA, currently at 1,661, would indicate that the FBM KLCI has entered a bear phase with more downside to come.
Overnight, the Dow fell 170.33 points or -1.14% to close at 14,776.13. Today, the FBM KLCI is likely to trade within a range of 1,673 to 1,739.
This week's expected range: 1661 – 1818
Today’s expected range: 1673 – 1739
Resistance: 1713, 1726, 1739
Support: 1673, 1686, 1693