Stocks on Bursa Malaysia closed on a bearish note yesterday as renewed concerns over the Eurozone debt crisis dampened investor sentiment globally. The weaker performance of the local bourse was in line with its regional peers as a surge in Spanish government bond yields and the slower growth of the Chinese economy renewed concerns across the markets. The FBM KLCI ended 5.61 points lower at 1,597.51 after opening 0.7 of a point easier at 1,602.42. Losers outnumbered gainers by 428 to 272 while 320 counters were unchanged. Total market volume slipped to 1.049 billion shares worth RM1.263 billion from Friday’s close of 1.348 billion shares worth RM1.656 billion.
Taking cue from the bearish performance of Wall Street last Friday, the FBM KLCI opened 0.7 point lower at 1,602.42 and plunged to the intra-day low of 1,594.63 within the first five minutes of trading. The key index then rebounded to 1,601 but continued to succumb to selling pressure and ended the day below the 1,600-point level. Chart-wise, the FBM KLCI formed a bearish black candlestick which indicates the bears were in control for the day, and confirmed the possible reversal signal generated by the spinning-top candlestick formed on Friday. With the bearish down move yesterday, the FBM KLCI had closed below the short term 5 and 10-day SMA, and is likely to continue to consolidate. Immediate downside support zone is at 1,594 to 1,590, where 1,590 is the 20-day SMA support level, and the next lower support level is expected at 1,586 provided by the 30-day SMA.
MACD has turned downward and its histogram also turned longer southward, indicating a changed in the momentum to a bearish note. Nevertheless, the MACD is still above the zero, and hence, the current weakness may well be just a short term correction in a bull market. RSI (14) hooked downward to 57.4 from 62.2 previously, indicating a weakening of the short term relative strength to the mildly bullish level. Stochastic hooked downward marginally to 68.4, indicating a pause in the short term up cycle and the market strength. Readings from the indicators showed that the FBM KLCI is currently undergoing a short term correction and consolidation process, and this may continue until clear signs of breakout are seen.
The medium to longer term uptrend of the FBM KLCI still remained intact while for the short term, the key index may moves sideways range bound until a breakout is seen above the all-time-high level of 1,609.33. With total volume just above the one billion shares level, the broad market is likely to remain in a slow and sluggish mode with rotational play on the penny stocks.
Overnight, the Dow rebounded +71.82 points or +0.56% to close at 12,921.41. Today, the FBM KLCI is likely to trade within a range of 1,586 to 1,611.
This week's expected range: 1574 – 1623
Today’s expected range: 1586 – 1611
Resistance: 1602, 1606, 1611
Support: 1586, 1590, 1593
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