Stocks on Bursa Malaysia recovered to close off lows in the afternoon yesterday on advances in major Asian markets as global sentiment improved in anticipation that European authorities will step in to reduce the impact of budget deficit concerns in the region.
The FBM KLCI had earlier fallen by as much as 10.85 points to the intra-day low of 1224.38 before recovering to close 1.36 points or 0.11% lower at 1233.86. Market breadth was negative with losers led gainers by 345 to 293 while 269 counters were unchanged. Volume was marginally higher at 773 million shares worth RM1.515 billion.
Chart wise, the FBM KLCI formed a hammer-like candlestick which is a bottom reversal signal. It indicates that a temporary bottom is found at the 1224 level, and the index might rebound further. However, as the short term trend is down, the index will have to face many resistances as it rebound, it will have to cross two major resistances at 1245 and 1250.
MACD continued to slide down indicating the increase in downward momentum. RSI (14) at 25 indicates a bearish market for the short term, and Stochastic at 4.8 is deeply oversold for the short term, and the market might stage for a rebound.
The benchmark FBM KLCI has in the short term turned bearish, whether it can successfully make a reversal or continue the downtrend would very much depends on the external factors. The underlying long term trend is, however, still up.
Today, the FBM KLCI may trade within a range of 1220 to 1245.
This week's expected range: 1220 – 1288
Today’s expected range: 1220 – 1245
Resistance: 1237, 1241, 1245
Support: 1220, 1227, 1231
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