Stocks on Bursa Malaysia ended broadly lower yesterday on continued selling pressure, as investors trimmed their positions amid uncertainties in the global market. The FBM KLCI fell for seventh consecutive days to close 12.04 points or 0.94% lower at 1273.69, after losing as much as 21.62 points in the early hours, dragged down by heavy losses in SIME DARBY and PBBANK. Losers outpaced gainers by 415 to 252 while 285 counters were unchanged. Volume traded dropped to 664 million shares worth RM1.286 billion.
The FBM KLCI opened 2.77 points lower at 1,282.96 and hit the intra-day low of 1264.11, before bargain-hunting activities pushed the key index to close off-low. Chart wise, the benchmark index formed a black candlestick with long lower shadow which indicates heavy selling as well as the surfacing of buying support by the bargain-hunters.
As mentioned in yesterday’s analysis, the two important support levels to watch out for are the 61.8% Fibonacci retracement level at 1272 and the 200-day MA support at 1266, the key index had in fact punched through these two levels but bounced off to close just above the 61.8% Fibonacci level. If these two support levels can’t hold, then there is this likelihood that the index may come down to test the psychological support level at 1250, which happen to be the 78.6% Fibonacci retracement level.
MACD continued to slide down at a faster pace, indicating an increase in downward momentum. RSI(14) at 21.8 has moved into the very bearish zone, and is short term oversold, a technical rebound is expected anytime. Stochastic at 9.07 shows very weak market strength, but has hooked up, reflecting the rebound of the index off its low. Signals from the indicators still point towards a weak market ahead.
Overnight, DJIA closed 126.82 or 1.24% lower at 10,066.57. The FTSE +6.68 (+0.13%) to close at 5069.61 and GDAX -23.57 (-0.4%) to close at 5805.68.
Today, the market is likely to remain cautious and the FBM KLCI is likely to trade within a range of 1246 to 1288.
This week's expected range: 1230 – 1322
Today’s expected range: 1246 – 1288
Resistance: 1278, 1283, 1288
Support: 1246, 1255, 1265
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