Stocks on Bursa Malaysia suffered further losses yesterday following the slide on Wall Street last week. The FBM KLCI opened with a 3 points gap down and trade lower to hit the intra-day low of 1292.76 before last minute bargain hunting pushes the benchmark index off low to close 3.66 points or 0.28% lower at 1296.79. Market breadth was negative with losers led gainers by 441 to 266 and 251 counters were unchanged. Volume dropped to 996 million shares worth RM1.131 billion.
Chart wise, the FBM KLCI formed a dragon fly shape Doji candlestick which indicates buying support despite the index falling. The formation of this candlestick may also signify possible bottom in a downtrend. The key index has fallen below the 10-day moving average which indicates a reversal of the short term uptrend since its breakout from the consolidation in late November 2009.
MACD has turned down and is resting right on its signal line, indicating a loss in momentum. The continued slide down of RSI and Stochastic also reflected the short term correction scenario. However, no major bearish signal is generated yet, as all the indicators are still in their respective bullish territory.
The fall of the FBM KLCI might just be a healthy correction to the uptrend, and in fact, should be viewed as an opportunity to collect quality shares at lower prices.
Today, the FBM KLCI is likely to trade within a range of 1289 to 1302.
This week's expected range: 1270 – 1320
Today’s expected range: 1289 – 1302
Resistance: 1298, 1300, 1302
Support: 1289, 1291, 1294
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