Stocks on Bursa Malaysia tumbled for the second consecutive day yesterday along with most regional bourses, with blue chips battered by rising foreign selling amid investors' concerns over Syria and a possible easing of stimulus measures by the US Federal Reserve. Losses from the heavy selling, however, was pared down when local institutional investors stepped in to pick up the battered counters in afternoon trading. The FBM KLCI fell 15.07 points, or 0.88%, after losing more than 40 points in early trading, to close at 1,686.17, with the key index moving between 1,689.68 and 1,660.39. Losers overwhelmed gainers by 631 to 265, with 274 counters unchanged. Turnover stood at 2.24 billion shares worth RM3.37 billion against 2.29 billion shares worth RM2.68 billion on Tuesday.
Taking cue from the 170.33 points loss of the Dow overnight, the FBM KLCI opened 14.01 points lower with a downside gap at 1,687.23 and plunged to the intra-day low of 1,660.39 within the first twenty five minutes of trading. The key index rebounded from the low and moved gradually higher for the rest of the day to touch the intra-day high of 1,689.68 before pulling back to close off high. Chart-wise, the FBM KLCI formed a black hammer candlestick, a bottom reversal candlestick pattern which indicates strong buying support at current level, and a temporary bottom for the FBM KLCI might have been seen. Nevertheless, a confirmed reversal will requires the key index to at least close the downside gap formed yesterday. Hence, the FBM KLCI is likely to move higher today if the buying continues to come in. Immediate overhead resistance zone is at 1,689 to 1,700, while the critical downside support is at 1,660.
MACD and its histogram continued to slide lower, indicating an increase in the bearish momentum. RSI (14) was lower at 18.4 from 20.9, indicating an extremely bearish state of the FBM KLCI, or a state of serious oversold for the short term, and a rebound might be expected. Stochastic hooked upward to 12.1 from 8.9 and is touching the slow stochastic line, indicating a possible reversal is in sight. Readings from the indicators showed that the FBM KLCI is in an extremely bearish state but is seriously oversold for the short term, and hence a rebound might be expected.
The trend of the FBM KLCI remained down and bearish for the moment as the key index is closing below most of the long term moving averages. Nevertheless, the FBM KLCI staged a strong rebound yesterday after hitting the 360-day SMA, and close above the 300-day SMA. Hence, the much long term support is seen for the FBM KLCI at the 300 to 360-day SMA support level. The 1660-point level cannot be breached anymore, and a break of this critical support level will see the FBM KLCI plunging to the 1,650 to 1,600 zone.
Overnight, the Dow rebounded 48.38 points or +0.33% to close at 14,824.51. Today, the FBM KLCI is likely to trade within a range of 1,638 to 1,718.
This week's expected range: 1661 – 1818
Today’s expected range: 1638 – 1718
Resistance: 1697, 1708, 1718
Support: 1638, 1649, 1667