Stocks on Bursa Malaysia ended lower across the board yesterday tracking a negative Wall Street as well as news of local inflation pressure. The bearish sentiment was driven primarily by negative external developments especially the light crude oil price due to escalating geopolitical tension in the Middle East. The FBM KLCI slipped further by 21.24 points or 1.41% to end at 1,489.87, after opening in red at 1,506.66. Losers beat gainers by 863 to 116 while 155 were unchanged. Volume rose to 2.003 billion shares worth RM2.623 billion from 1.695 billion shares worth RM2.046 billion on Wednesday.
The FBM KLCI opened 4.45 points lower at 1,506.66 but rebounded to the intra-day high of 1,511.39 at mid morning, and was marginally lower at noon. Heavy selling pressure which surfaced in the afternoon pushed the key index lower, breaking the psychological support level of 1,500 to close at the day’s low of 1,489.87. Chart-wise, the FBM KLCI formed a long black candlestick which indicates sellers were dominant throughout the day in pushing share prices lower. The key index has now broken its immediate critical support levels at 1,500 and 1,490, and is expected to slide lower to test the next critical lower support zone at 1,480 to 1,474. If the support at 1,474 could not hold, the key index is likely to slip down to the 1,450 level.
MACD continued to slide lower, indicating an increased in the downward momentum. RSI (14) slid lower to 35.7, has moved into the very bearish zone. Stochastic also slid lower to 27, indicating a pick up in the downward momentum and continuation of the down cycle. Readings from the indicators showed a very bearish condition of the FBM KLCI, and this is likely to continue for a while.
Now that the FBM KLCI has closed below the long term 120-day moving average (MA), technically, the key index is considered to have started to turn bearish for the long term. In the near term, if the key index is not able to rebound and close above the 120-day MA which is currently at 1,500, it is likely to slide lower to find its support from the 200 and 240-day MA currently at 1,431 and 1,413.
Overnight, the Dow fell -37.28 points or -0.31% to close at 12,068.50. Today, the FBM KLCI is likely to trade within a range of 1461 to 1505.
This week's expected range: 1474 – 1550
Today’s expected range: 1461 – 1505
Resistance: 1495, 1500, 1505
Support: 1461, 1475, 1482
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