Stocks on Bursa Malaysia closed lower yesterday amid renewed worries over the Euro-zone debt crisis. The Euro-zone effects spread across Asia after Standard & Poor's downgraded its ratings on nine countries including France, Italy and Spain. The FBM KLCI lost 14.01 points or 0.92% to 1,509.06 after opening 2.68 points lower at 1,520.39. Market breadth was bearish with 542 losers and 207 gainers while 259 counters were unchanged. Turnover was lower with 1.435 billion shares valued at RM1.363 billion changed hand compared with 1.766 billion shares worth RM1.608 on Friday.
The FBM KLCI opened with a down gap of 2.68 points at 1,520.39 and slid lower throughout the day with weak intermittent rebound, and the key index ended the day at its lowest point. Chart wise, the FBM KLCI formed a bearish long black candlestick which indicates the bears were in full control for the day. With a downside breakaway gap and closing below the 5 and 10-day SMA, the key index is likely to continue its down move to test the immediate lower support zone of 1,506 to 1,501.
MACD continued to slide lower, and has just made a dead-cross over the signal-line, giving out a sell signal. Nevertheless, as MACD is above the zero-line, the current bearish signal may well be just a correction is an uptrend. RSI (14) has plunged lower to 54.6, indicating the short term relative strength of the key index has turned mildly bullish from bullish. Stochastic has also slid below the slow stochastic line to 73.2, indicating the beginning of a down cycle and weakening of the market strength. Readings from the indicators showed that the FBM KLCI has turned weak or bearish for the immediate short term, and may lead into a further correction.
The immediate short term trend of the FBM KLCI has turned down, as the key index is now closing below the very short term 5 and 10-day SMA. The short and medium term trend represented by the 30 and 60-day SMA is still up. Immediate down side support zone is at 1,506 to 1,501 provided by a cluster of long term moving averages, while the upside resistance zone is at 1,515 to 1,521. As long as the FBM KLCI does not close below the psychological support of 1,500-point level, the current down trend is viewed as just a correction to the recent uptrend.
Overnight, US market as closed for a public holiday. The Europe market was generally up. Today, the FBM KLCI is likely to trade within a range of 1,492 to 1,533.
This week's expected range: 1502 – 1540
Today’s expected range: 1492 – 1533
Resistance: 1518, 1526, 1533
Support: 1492, 1500, 1505
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