Stocks on Bursa Malaysia continue to head south for the second consecutive day at close yesterday as investors reduced their holdings on growing fears over weakening global economy. Most losses were seen in Petronas Chemicals, which contributed about 6.471% of the total FBM KLCI weightage. The benchmark FBM KLCI lost 2.48 points or 0.18% to close at 1,410.64 after opening 3.11 points lower at 1,410.01. Losers led gainers by 457 to 230 while 301 counters were unchanged. Total market volume rose to 784.626 million units valued at RM1.418 billion from 724.373 million shares worth RM1.352 billion on Monday.
The FBM KLCI opened with a down gap of 3.11 points at 1,410.01 and plunged to the intra-day low of 1,404.27 within the first ten minutes. It then rebounded to the intra-day high of 1,412.53 and after that moved sideways within the day’s high and low range till closing. Chart-wise, the FBM KLCI formed a Doji candlestick with a longer lower shadow which indicates indecision of market direction and consolidation. The down gap indicates initial fear which caused the sell down, but later the fear gradually diminished and the key index settled near the opening price. The appearance of Doji after a long downtrend also indicates a pause in the bearish down move and a reversal might take place. The FBM KLCI has come to the 1,410-point target level predicted on August 8th, 2011 when the key index was still at 1,524. The current support levels at 1,410 and 1,400 are crucial, and a close below the 1,400-point psychological support level will likely see the FBM KLCI moving to the next lower target at 1,378.
MACD continued to slide lower, indicating an increase in the bearish momentum. RSI (14) is at 27.1, and has continued to fall further into the short term oversold zone, and is very bearish. Stochastic is at 5.15, and has hooked up, indicating a possible rebound. Readings from the indicators showed that the FBM KLCI is currently still very weak and bearish, but the stochastic indicator has shown a weak sign of a possible rebound ahead.
The trend of the FBM KLCI remained down and bearish. Immediate down support zone is at 1,404 to 1,400, while the immediate overhead resistance zone is at 1,413 to 1,423. With the appearance of a Doji yesterday, the FBM KLCI is likely to remain range-bound today. Overnight, the Dow gained +7.65 points or +0.07% to close at 11,408.66. Today, the FBM KLCI is likely to trade within a range of 1,397 to 1,421.
This week's expected range: 1380 – 1502
Today’s expected range: 1397 – 1421
Resistance: 1414, 1418, 1421
Support: 1397, 1400, 1405
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