Stocks on Bursa Malaysia which languished in the red throughout trade last Friday closed lower across the board as caution prevailed and investors reduced their holdings on jitters over the outcome of the EU Summit. The FBM KLCI fell by 12.79 points or 0.87% to close at 1,460.13, and week-on-week, the benchmark index declined 28.89 points from 1,489.02 a week earlier. Losers led gainers by 515 to 213 while 278 counters were flat. A total of 1.296 billion shares valued at RM1.057 billion were traded compared with Thursday's volume of 1.622 billion shares worth RM1.175 billion. Weekly volume increased to 9.596 billion shares valued at RM6.641 billion from 6.21 billion shares worth RM6.74 billion.
The FBM KLCI was in a correction mode the whole of last week with all the negative news surrounding the market, where the S&P warned that credit ratings of most Euro-zone countries may be downgraded ahead of a summit on the European debt crisis, then, weaker-than-expected economic data from Japan and Australia, and Germany's rejection of proposals to add power to the Euro-zone's bailout fund all combined to dampen the local stock market last week.
On the weekly chart, The FBM KLCI formed a dark-cloud-cover candlestick pattern, a top reversal candle pattern which indicates the bears were in control throughout the week, and the key index is likely to further correct downward this week. On the daily chart, the FBM KLCI opened with a down gap of 8.22 points at 1,464.70 and fell to the intra-day low of 1,456.71 before rebounding to close off low at 1,460.13. The key index formed a black hammer-like candlestick which indicates sellers were strong in pushing down the key index but bargain-hunters came in to pick up selected heavyweights which lifted the index off low. As there is no clear bottoming sign yet, the FBM KLCI is likely to further consolidate. Immediate downside support zone is at 1,456 to 1,437, and the pivot low support at 1,424 is critical, if this level could not hold, then the key index is likely to re-visit the 1,400-point level.
Weekly MACD continued to climb higher but showed sign of tapering off, indicating a reduction in the weekly upward momentum. Daily MACD has continued to fall further, indicating a continued loss in the daily momentum. Nonetheless, it is still above the signal-line, which indicates the current down move is a correction. Weekly RSI (14) has hooked downward to 47.7 from 52.3 a week earlier, reflecting the pullback on the weekly chart and the return of the weekly relative strength to the mildly bearish zone. Daily RSI (14) has also plunged lower to 48.5 from 53.4, indicating the daily relative strength has turned mildly bearish. Weekly Stochastic continued to climb higher to 79.2, indicating the weekly up cycle is still intact. The daily Stochastic, however, has fell lower to 61, indicating a loss in the daily momentum and a continuation of the down cycle on the daily perspective. Readings from the indicators showed that the FBM KLCI is still fine on the weekly chart, but the daily chart showed that it is quickly losing its daily momentum and is turning bearish.
The short term trend of the FBM KLCI has turned down as the key index is now staying below the short term 5, 10, 20 and 30-day moving averages. The medium term trend is sideways, while the long term trend is bearish bias. Immediate support zone is at 1,456 to 1,424 with 1,450 being the important psychological support.
Last Friday, the Dow rebounded +186.56 points or +1.55% to close at 12,184.26. This week, the FBM KLCI is likely to trade within a range of 1,410 to 1,529, and for today, it is likely to trade within a range of 1,448 to 1,473.
This week's expected range: 1410 – 1529
Today’s expected range: 1448 – 1473
Resistance: 1465, 1469, 1473
Support: 1448, 1452, 1456
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