Stocks on Bursa Malaysia closed broadly lower yesterday on the back of subdued demand due to lack of catalysts to drive trading. The recent International Monetary Fund's (IMF) move to revise downward its forecast on global growth to grow by 3.8% next year compared to its earlier forecast of 4% in July has put pressure on demand for the stock markets. The benchmark FBMKLCI ended 9.54 points or 0.53% lower to close at 1,786.84 after moving between 1,786.78 to 1,801.12 points throughout the day. Losers led gainers by 659 to 209 while 262 counters were unchanged. Total volume reduced to 2.04 billion shares worth RM2.16 billion compared with 2.22 billion shares worth RM2.45 billion on Tuesday.
Following a mild rebound on Wall Street overnight, the FBMKLCI opened 0.17 of a point lower at 1,796.21 and rebounded to hit the intra-day high of 1,801.12 in the first hour after opening. However, the rise could not sustain and the key index slipped lower to move sideways in the positive zone. Selling pressure emerged at mid-afternoon which saw the key index sliding lower to close near the low of the day. Chart-wise, the FBMKLCI formed a bearish black candlestick which indicates the bears were in control for the day in driving the index lower. Hence, the FBMKLCI is likely to slip lower today if the selling pressure continues. Immediate downside support zone is at 1,778 to 1,769, while the overhead resistance zone is at 1,790 to 1,801.
MACD and its histogram continued to slide lower, indicating an increased in the bearish momentum. RSI (14) was lower at 20.1 from 22.6, indicating the key index is turning extremely bearish from a very bearish state, and is deeply oversold for the short term. Stochastic was lower at 2.9 from 3.7, indicating an extremely weak market strength and continuation of the down cycle. Readings from the indicators showed that the FBMKLCI is extremely bearish and weak, and hence, is likely to further correct downward.
The technical picture of the FBMKLCI remained unchanged in that the trend of the FBMKLCI is down and bearish as the key index continues to plunge lower. With the failed rebound in the morning session yesterday, it shows the market is still under selling pressure and the FBMKLCI is likely to slip lower on continued selling pressure. Hence, it is likely to slide lower to test the lower support zone of 1,778 and 1,785, where 1,778 is the 50% Fibonacci retracement support level for the range measuring from the pivot low of 1,660.39 on August 28th 2013 to the pivot high of 1,896.23 on July 8th 2014, and 1,785 is the 161.8% Fibonacci projection for the wave-C, and the market is likely to see some stronger support around these levels.
Overnight, the Dow fell 173.45 points or -1.06% to close at 16,141.74. Today, the FBM KLCI is likely to trade within a range of 1,767 to 1,815.
This week's expected range: 1753 – 1890
Today’s expected range: 1767 – 1815
Resistance: 1796, 1805, 1815
Support: 1767, 1777, 1782
Stocks to watch: FBMKLCI-HB, HSL, MEGB, PESONA, TEKSENG
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