FBM KLCI - likely to fall further

Stocks on Bursa Malaysia ended lower yesterday with brisk selling in most blue-chip counters due to lack of fresh catalysts. The local market came under pressure in line with the generally negative sentiment in most regional markets, as investors were still worried over the political upheaval in Greece and France which would hurt the Eurozone debt progress. The FBM KLCI fell 5.7 points or 0.36% lower to close at 1,584.90 after opening 0.43 point higher at 1,591.03. Losers led gainers by 450 to 273 while 313 counters were unchanged. Turnover rose to 1.281 billion shares valued at RM1.414 billion compared with 1.274 billion shares worth RM1.235 on Tuesday.

The FBM KLCI opened 0.43 points higher at 1,591.03 and slipped lower for the rest of the day with weak intermittent rebound, and settled at the lowest point of the day. Chart-wise, the formed a bearish black Marubozu candlestick with a dark-cloud-cover pattern, which indicates sellers were dominant for the day and is a key top reversal candle pattern. Hence, the FBM KLCI is likely to fall further today with immediate downside support zone at 1,579 to 1,566.

MACD has turned flat and is still below the zero-line and the signal-line, indicating a pause in the rebound and is still bearish bias. RSI (14) has hooked downward to 49.6, indicating the short term relative strength has again turned mild bearish. Stochastic also hooked downward to 56.7 but still above the slow stochastic line, reflecting the pullback in the key index. Readings from the indicators showed that the FBM KLCI is in a correction mode with a bearish bias.

With the bearish pullback yesterday, the FBM KLCI has again fallen below the 5, 20 and 30-day SMA but is still above the 10-day SMA which is currently at 1,581-point. If the FBM KLCI continues to fall below the 10-day SMA, then the short term downtrend is likely to continue and spell an end to the recent rebound. The medium term trend represented by the 50 and 60-day SMA has turned sideways with the 60-day SMA currently at 1,580-point, and a break below the 60-day SMA would likely see the key index re-visiting the recent support of 1,566. The long term trend, nevertheless, is still up at the moment. In short, the FBM KLCI is likely to remain in a consolidation mode with a downward bias.

Overnight, the Dow fell another -97.03 points or -0.75% to close at 12,835.06. Today, the FBM KLCI is likely to trade within a range of 1,576 to 1,597.

This week's expected range: 1553 – 1614
Today’s expected range: 1576 – 1597

Resistance: 1589, 1593, 1597
Support: 1576, 1580, 1582