Stocks on Bursa Malaysia headed south yesterday ending the day on cautious sentiment with the FBM KLCI closing below the 1,565-point level, as investors reduced their holdings as they continued to fret over China’s growth outlook following a huge trade deficit of US$31.5 billion in February further indicating slowdown in its economy, and the development in Greece’s debt issue. The benchmark FBM KLCI fell 14.25 points or 0.90% to close at 1,564.75 after opening 0.83 of a point better at 1,579.83. Losers led gainers by 516 to 260 while 318 counters were unchanged. Total market volume fell to 1.268 billion units valued at RM1.717 billion, from last Friday’s 1.306 billion shares valued at RM1.367 billion.
The FBM KLCI opened 0.83 point higher at 1,579.83 and surged to the intra-day high of 1,580.08 in early morning trade. Selling pressure which surfaced pushed the key index lower for the rest of the day which hit the intra-day low of 1,563.73 before rebounding slightly to close off low. Chart-wise, the FBM KLCI formed a bearish long black candlestick which indicates reversal down after the appearance of a Doji candlestick on last Friday. With the bearish downward move yesterday the FBM KLCI had broken the support level at 1,567 and is likely to slide lower to test the next lower support zone of 1,558 to 1,549.
MACD continued to slide lower, indicating a pick up in the downward momentum. RSI (14) plunged lower to 52.6, indicating the short term relative strength has turned from bullish to neutral. Stochastic has slid lower to 50.8, indicating continued loss in market strength and the short term down cycle. Readings from the indicators showed that the FBM KLCI is undergoing a heavy correction and the consolidation process is likely to extend.
The short term trend of the FBM KLCI has turned bearish following yesterday’s heavy downward move, and the key index is now closing below the short term 5, 10 and 20-day SMA, marking the beginning of a short term down trend, and it is likely to slide lower to test the 30-day SMA support at 1,558. Nevertheless, the medium and longer term trend still remained up. The FBM KLCI has also closed below the middle line of the uptrend channel, indicating the current trend is turning to bearish bias, and the critical lower support is at the lower trend line which is now at 1,540.
Overnight, the Dow rose +37.69 points or +0.29% to close at 12,959.71. Today, the FBM KLCI is likely to trade within a range of 1,542 to 1,597.
This week's expected range: 1547 – 1617
Today’s expected range: 1542 – 1597
Resistance: 1576, 1586, 1597
Support: 1542, 1553, 1558
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