Stocks on Bursa Malaysia remained in the red at the close yesterday as investors continuously sold off their holdings in most heavyweights and lower-liners. However, mild bargain hunting in some heavyweights managed to cap some of the losses compared to massive losses after the morning trading session. The FBM KLCI lost 27.44 points, or 1.8%, to close at 1,496.99, dropping below 1,500-point level for the first time since March 17, 2011. Losers trumped gainers by 1,051 to 67 while 99 counters were unchanged. Turnover rose to 1.937 billion shares worth RM3.612 billion from 1.78 billion shares worth RM3.672 billion last Friday.
The FBM KLCI opened with a down gap of 9.24 points at 1,515.19 and plunged to the intra-day low of 1,476.24 at late morning, losing 48.19 points at its worst, and stabilized there. The key index rebounded in the afternoon session and recovered almost 28 points when it touched 1504.09 before easing to close at 1,496.99. Chart-wise, the FBM KLCI formed a black hammer-like candlestick which closed just slightly above the mid-point of the day; this indicates the bear is still in control, and the key index may continue to consolidate. The FBM KLCI has now closed below the long term 240-day moving average (MA), and has tested the support of the 300-day MA and rebounded off it. The critical support level to watch is the 1,474-point level, which has in the past provided strong support. A breach of the 1,474-point level is likely to see the FBM KLCI sliding towards the 38.2% Fibonacci retracement level at 1,462 and the 360-day MA support level at 1,452.
MACD continued to slide deeper into the bearish zone, indicating continued increase in the downward momentum. RSI (14) is at 21.3, and has plunged deeper into the bearish zone. Stochastic is at 23.7, and has hooked up, giving out a divergence signal. Readings from the indicators showed that the FBM KLCI is currently very weak and bearish. However, as the oscillator is at the oversold zone, some rebound maybe expected soon.
The trend of the FBM KLCI has turned bearish, and this could be just the beginning of a long term bear trend, any rebound rally should be viewed as an opportunity to liquidate. Immediate downside support zone is at 1,474 to 1,462, while overhead resistance zone is at 1,500 to 1,515.
Overnight, the Dow fell a hefty -634.76 points or -5.55% to close at 10,809.85. Today, the FBM KLCI is likely to trade within a range of 1,438 to 1,554.
This week's expected range: 1453 – 1553
Today’s expected range: 1435 – 1554
Resistance: 1516, 1535, 1554
Support: 1438, 1457, 1477
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