Stocks on Bursa Malaysia ended broadly lower yesterday, dragged by losses in key heavyweights. A correction sets in after the benchmark index touched a two-and-a-half-year high on Tuesday with investors tracking losses on Wall Street amid pessimistic assessment by the US Federal Reserve's Federal Open Market Committee on Tuesday that the US economic recovery had slowed. The benchmark FBM KLCI lost 16.67 points or 1.13% to 1458.08. Losers beat gainers by 523 to 221 while 254 counters were unchanged. Turnover was lower at 999 million shares worth RM1.416 billion from 1.332 billion shares worth RM2.021 billion on Wednesday.
The FBM KLCI opened 0.95 point higher at 1475.7 and traded to the intra-day high of 1477.03 before selling pressure sent it to the intra-day low of 1456.64, the key index rebounded weakly to close at 1458.08 on late buying of selected blue-chip stocks. Chart-wise, the benchmark index formed a bearish black candlestick which confirms the top reversal signal of the dark-cloud-cover pattern formed on Wednesday. The key index is expected to correct further downward. As the index has penetrated the support level at 1460 by the 10-day moving average (MA), the immediate support level to watch is the psychological support at 1450 and the pivot high which turned support at 1441.
MACD has turned southward and has just made a “dead-cross” over its trigger line, indicating that a serious correction has started. RSI(14) plunged steeply from 81 to 65.7, indicating a deep correction. Stochastic at 82.6 continued to slide lower, indicating a down cycle had started. Signals from the indicators are indicating a correction of the FBM KLCI which is long overdue had started, and the key index may continue to move lower to test the lower support levels.
As mentioned in yesterday’s analysis that if the benchmark index breaks below 1470, it might slide lower to the 1460 level, it did. For the immediate short term, the FBM KLCI is expected to correct further downward, nonetheless, the underlying medium and long term trend is still up and may give buffer to the short term correction. Immediate key support for the index lies at 1450, 1441, 1428. Overhead resistance zone is at 1465 to 1480.
Overnight, the Dow fell -76.89 points or -0.72% lower to close at 10,662.42. Today, the FBM KLCI is likely to trade within a range of 1430 to 1480.
This week's expected range: 1403 – 1520
Today’s expected range: 1430 – 1480
Resistance: 1465, 1471, 1480
Support: 1430, 1443, 1450
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