Stocks on Bursa Malaysia closed lower across the board yesterday for the fifth consecutive days as the market suffered heavy losses on continued technical correction on the local benchmark index. The FBMKLCI finished 19.07 points or 1.07% lower at the intra-day low of 1,767.77. Losers thumped gainers by 1,001 to 64, while 144 counters were unchanged. Total volume increased to 2.56 billion shares worth RM2.68 billion from 2.04 billion shares worth RM2.17 billion on Wednesday.
Following the bearish performance on Wall Street overnight, the FBMKLCI opened 2 points lower with a downside runaway gap at 1,784.84 and plunged to the morning session low of 1,771.92 within the first fifteen minutes after opening. The key index rebounded and move sideways range-bound for a major part of the day. However, selling pressure appeared again at late afternoon and pushed the FBMKLCI to close at the lowest point of the day. Chart-wise, the FBMKLCI formed a bearish Marubozu candlestick which indicates the bears were in full control for the day. Hence, the FBMKLCI is likely to fall further today on continued selling pressure. Immediate downside support is at 1,760 to 1,750, while the overhead resistance zone is at the gap area of 1,784 to 1,786.
MACD and its histogram continued to slide lower, indicating an increased in the bearish downward momentum. RSI (14) plunged lower to 16.2 from 20.1, indicating extremely bearish situation and the key index is deeply oversold for the short term. Stochastic slipped lower to 2.5 from 2.9, indicating an extremely weak market and is deeply oversold. Readings from the indicators showed an extremely bearish and oversold condition of the FBMKLCI, and hence, a technical rebound might be expected ahead.
The technical picture of the FBMKLCI still remained down and bearish as the key index continued to break the much longer term moving averages. The FBMKLCI has on yesterday closed below the 500-day simple moving average (SMA), and is likely to slide lower to test the 550 and 600-day SMA support at 1,761 and 1,747. Based on Elliott wave study, the FBMKLCI is currently running in the wave-C and it has breached the 161.8% target of 1,785 yesterday and it is moving towards the 200% target of 1,761, and the 261.8% target is at 1,725. Based on Fibonacci retracement support 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, the FBMKLCI has breached the 50% retracement support level of 1,778 yesterday, and hence, is likely to slide lower to test the 61.8% retracement support level of 1,750, while the 76.4% support level is at 1,716.
Overnight, the Dow fell 24.50 points or -0.15% to close at 16,117.24. Today, the FBM KLCI is likely to trade within a range of 1,745 to 1,801.
This week's expected range: 1753 – 1890
Today’s expected range: 1745 – 1801
Resistance: 1779, 1790, 1801
Support: 1745, 1756, 1762
Stocks to watch: FBMKLCI-HB, JIANKUN, LIONCOR
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