Stocks on Bursa Malaysia slumped for another week last week, triggered by rising political tensions in the Korean peninsula and concern the Europe debt crisis and its possible contagion effect might undermine the global economic recovery. Sell down of SIME due to cost overrun issue, and other key heavyweights such as PPB and Banking stocks also contributed to the nine consecutive days of losses in the benchmark index FBM KLCI.
On a week-on-week basis, the FBM KLCI lost 16.57 points or 1.3% to settle at 1,269.16. For the holiday-shortened week, the average daily trading volume increased to a four-week high of 849.3 million shares with average value of RM1.61 billion, compared with the 751.5 million shares worth RM1.35 billion average the previous week, as foreign selling of blue chips picked up pace.
On the weekly chart, the FBM KLCI fell to the intra-week low of 1243.86 before bouncing back strongly last Thursday to close above the psychological support level of 1250 and the 200-day moving average (MA) which is now at 1267.55. It formed a hammer candlestick which indicates strong technical rebound due to bargain-hunting of blue-chip shares by investors.
The FBM KLCI is now below its 5, 10 and 30-week moving averages which indicates a possible medium term downtrend in the forming. On the daily chart, the key index has moved below all the important long term MA support but managed to climb back just above the 200-day MA. The important support levels to watch for this week is the immediate 200-day MA level at 1267, the psychological support level at 1250 and the low of the last up wave at 1224. If these levels could not hold, then we might see the key index plunging to the 1200 and 1150 levels. 1224 coincided with the 23.6% Fibonacci Retracement (FR) level whereas 1150 coincided with the 38.2% FR for the full length of the run-up from the low of 836 on March 12 2009 to the 1,349 peak of May 4.
Weekly MACD continued to slide down but still in the positive zone, while on the daily chart, daily MACD continued to slide deep into the negative zone indicating the downward momentum is still very strong. Weekly RSI(14) at 45.7 has cross below the 50 level into the bearish zone, while daily RSI(14) at 31.2 has hooked up reflecting the technical rebound on last Thursday. Weekly Stochastic at 52 continued to slide lower, indicating the down cycle is picking up in strength, while the daily Stochastic at 9.5 is deeply oversold but has hooked up reflecting the technical rebound.
While the adage "Sell in May and Go Away" may have become a self fulfilling prophecy, the main cause for the fall in global equity market and our local FBM KLCI is the Europe debt crisis and other regional issues. Technically, the short term down cycle for the FBM KLCI has begun, while the underlying long term trend is still up.
On a lack of fresh leads, with the mid-year school holiday coming and the FIFA world cup starting in two weeks time, the market is expected to go into a consolidation mode.
The Dow closed 122.36 points or 1.19% lower on last Friday at 10,136.63. This week, the FBM KLCI may trade within a range of 1208 to 1305, and for today it is likely to trade within a range of 1226 to 1286.
This week's expected range: 1208 – 1305
Today’s expected range: 1235 – 1286
Resistance: 1275, 1281, 1286
Support: 1235, 1244, 1256
No comments:
Post a Comment