Stocks on Bursa Malaysia ended lower almost across the board yesterday in tandem with losses in regional markets, on fear of the possible contagion effect of Europe debt crisis, uncertainties of global economic recovery, and the tension building up between North and South Korea. The FBM KLCI fell for the eighth consecutive days and suffered its worst losing streak since 2008, closing 23.56 points or 1.85% lower at 1,250.13, its lowest close in more than two months. Decliners overwhelmed advancers by 846 to 82 while 152 counters were unchanged. Turnover increase to 940 million shares worth RM1.786 billion compared with 662 million shares worth RM1.286 billion on Monday.
The FBM KLCI opened with a down gap of 8.72 points at 1264.97 and fell to the intra-day low of 1247.85 before last minute buying support helped to push it back above the psychological support level of 1250. The key index formed a bearish long black candlestick which indicates heavy selling pressure and the bear was in full control for the day.
As it was mentioned in yesterday’s analysis, the 1250 level marked an important support for the current downtrend, as it represents the 78.6% Fibonacci retracement level as well as the psychological support level. If this level couldn’t hold, the key index might come down to test the support level of 1230 formed on February 9, a critical support level which happened to be the 23.6% Fibonacci retracement level for the full length of the up wave from the beginning of this bull-run. Subsequently, the lower key support levels lie at 1200 and 1150.
MACD slide down further, indicating an increase in downward momentum. RSI(14) at 17.22 is deeply oversold for the short term and is in the very bearish zone. Stochastic at 6.69 again hooked down, is indicating a very weak market which may continue to test lower support.
Technically, the FBM KLCI has turned into a bear market when it closes below the 200-day MA, which is now at 1267. However, having run up so much from the low of 836 in March 2009 to the current high of 1349, which marked a gain of 513 points, a 23.6% retracement of the gains or 121 points is still considered a normal correction from the longer term perspective. The short term trend of the benchmark index is currently down, but the underlying long term trend is still up.
Overnight, DJIA closed 22.82 or 0.23% lower at 10,043.75 after falling as much as 292 points to the intra-day low of 9774.48. The broader base S&P500 however, rose 0.38 (+0.04%) to close at 1074.73.
Today, the market is likely to remain cautious and the FBM KLCI is likely to trade within a range of 1225 to 1267.
This week's expected range: 1230 – 1322
Today’s expected range: 1225 – 1267
Resistance: 1256, 1261, 1267
Support: 1225, 1237, 1243
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