Stocks on Bursa Malaysia closed lower across the board yesterday in tandem with most Asian equity markets. Market sentiment was dampened by worries over easier global growth moving forward as the International Monetary Fund has trimmed its global growth outlook for 2015 to 3.8% from 4% in an early estimate. The benchmark FBMKLCI fell 9.22 points or 0.5% to close at 1,824.32, the lowest point of the day after hitting an intra-day high of 1,831.79. Market breadth was negative with decliners thumping advancers by 935 to 93 while 175 counters were unchanged. A total of 2.57 billion shares worth RM2.49 billion were transacted compared with Tuesday's 2.18 billion shares worth RM2.07 billion.
Following the bearish performance of Wall Street overnight, the FBMKLCI opened lower with a downside gap of 2.87 points at 1,830.67 and rebounded to hit the intra-day high of 1,831.79 within the first five minutes after opening. However, the rebound found no follow through and the key index plunged to hit the morning session low of 1,824.52 in the next twenty minutes. The key index rebounded from the low to move sideways and recovered almost 5 points, but a last minute sell down sent the index to close at the lowest point of the day. Chart-wise, the FBMKLCI formed a bearish black candlestick with a downside runaway gap which indicates the market was being sold down in an almost panic situation. However, the narrower range of 7.47 points yesterday compared with the 15.93 points range a day earlier indicated that the downward momentum is reducing, and a rebound might be expected. Immediate downside support zone is at 1,821 to 1,813, while the immediate overhead resistance zone is at 1,831 to 1,833, the gap area.
MACD and its histogram continued to slide lower, indicating an increased in the bearish momentum. RSI (14) was lower at 29.5 from 34.4, entering the RSI oversold zone, indicating very bearish state of the key index. However, a technical rebound might be expected ahead. Stochastic was lower at 19.4 from 26.8, indicating very weak market and has also entered the stochastic oversold zone. Readings from the indicators showed that the FBMKLCI is bearish but is oversold for the short term, and hence, a technical rebound might be expected ahead.
The trend of the FBMKLCI remained down and bearish as the key index has closed below the 300-day simple moving average (SMA), indicating the FBMKLCI has turned bearish for the long term, and a further break of the immediate lower support by the 360-day SMA at 1,818 would see the key index plunging lower towards the psychological support of 1,800-points level.
Overnight, the Dow rebounded 274.83 points or 1.64% to close at 16,994.22. Today, the FBM KLCI is likely to trade within a range of 1,814 to 1,839.
This week's expected range: 1817 – 1870
Today’s expected range: 1814 – 1839
Resistance: 1829, 1834, 1839
Support: 1814, 1819, 1821
Stocks to watch: APFT, BORNOIL, CAP, CENSOF, EXTOL, GHLSYS, SCICOM, SMPC
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