Stocks on Bursa Malaysia ended mostly lower yesterday amid weak market sentiment on bearish external outlook. A downgrade on the US debt outlook by Standard & Poor’s dragged down major stock markets while worries over the Euro debt crisis spurred a sell-off in global stocks. The FBM KLCI eased 6.39 points or 0.42% to close at 1,521.53 after opening 7.71 points lower at 1,520.21. Decliners outpaced advancers by 455 to 295 while 294 were unchanged. Volume rose to 1.040 billion shares worth RM1.393 billion from 1.032 billion shares worth RM1.496 billion registered on Monday.
Taking cue from the heavy loss on Wall Street overnight, the FBM KLCI opened with a down gap of 7.71 points at 1,520.21 and plunged to the intra-day low of 1,514.94 within the first hour of trade. The key index rebounded gradually on bargain-hunting to touch the intra-day high of 1,522.72 before retracing to close off high at 1,521.53. Chart-wise, the FBM KLCI formed a hammer candlestick which is a bottom reversal pattern, and it indicates seller were initially dominant in pushing down the share prices but buyers later surfaced to reverse the initial downtrend. The key index has now tested the support at 1,517 provided by the 120-day moving average (MA) and rebounded off it. However, the FBM KLCI will have to close above the 1,541 level in order to reverse the current downtrend.
MACD continued to slide lower, indicating a continuous loss in market momentum and possible further consolidation. Nonetheless, the MACD line is still above the zero-line, indicating the current weakness could be just a short term correction. RSI (14) is lower at 46, indicating the key index is turning more bearish. Stochastic is at 16.6 and has slid lower into the short term oversold zone, and a rebound can be expected soon. Readings from the indicators showed a weak FBM KLCI, technically, and it is expected to continue with its current consolidation.
The short term trend of the FBM KLCI remained down, while the medium term trend is sideways, and the long term uptrend is still intact. Immediate overhead resistance zone is at 1,524 to 1,541, while the immediate downside support zone is at 1,517 to 1,514.
Overnight, the Dow rebounded +65.16 points or +0.53% to close at 12,266.75. Today, the FBM KLCI is likely to trade within a range of 1,508 to 1,531.
This week's expected range: 1464 – 1576
Today’s expected range: 1508 – 1531
Resistance: 1525, 1528, 1531
Support: 1508, 1511, 1516
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