Stocks on Bursa Malaysia closed lower yesterday on the back of the weakening ringgit and tracking the regional peers after China’s central bank devalued its yuan by 2%. Asian shares erased earlier gains following positive lead from Wall Street’s overnight rally as investors weighed China’s surprise move to allow its currency to fall against the US dollar to boost export. At close, the FBM KLCI fell 17.66 points or 1.07% to 1,636.71 after moving between 1,635.77 and 1,661.62 throughout the day. Losers led gainers by 529 to 290 with 346 counters unchanged. Total volume rose to 1.99 billion units valued at RM2.07 billion from Monday’s 1.91 billion units valued at RM1.99 billion.
Following Wall Street’s rally overnight, the FBM KLCI opened 0.93 points lower at 1,653.44 and rebounded to hit the intra-day high of 1,661.62 thirty minutes after opening. However, the rebound has no follow through and the key index slipped lower on renewed selling pressure which pushed it to the intra-day low of 1,635.77 at mid-afternoon, and rebounded slightly to close off low. Chart-wise, the FBM KLCI formed a bearish black candlestick which indicates the bears were in control for the day, and hence, the FBM KLCI is likely to continue its downtrend to slide lower on continued selling pressure. Immediate downside support zone is at 1,632 to 1,619, while the overhead resistance zone is at 1,649 to 1,661.
MACD and its histogram continued to slide southward, indicating an increased in the bearish momentum. RSI (14) plunged lower to 27.9 from 31.1, indicating the index has turned very bearish and was oversold for the short term. Stochastic was lower at 4.3 from 5, indicating very weak index strength and is oversold. Readings from the indicators showed that the FBM KLCI is very weak, bearish and oversold, and is likely to further weaken. Nevertheless, an oversold rebound might be expected ahead.
The trend of the FBM KLCI still remained down and bearish as the key index continued to break supports and registers new low, and hence, is likely to continue its downtrend. Based on Fibonacci retracement (FR) support levels, the bearish move yesterday has broken the 23.6% FR support of 1,637 for the range from the pivot low of 801.27, registered on October 28th 2008, to the pivot high of 1,896.23 on July 8th 2014, and is likely to slide lower to test the next lower support zone of 1,631 to 1,603, follow by the psychological support of 1,600-point.
Overnight, the Dow fell 212.33 points or -1.21% to close at 17,402.84. Today, the FBMKLCI is likely to trade within a range of 1,601 to 1,687.
This week's expected range: 1591 – 1768
Today’s expected range: 1601 – 1687
Resistance: 1653, 1670, 1687
Support: 1601, 1618, 1627
Stocks to watch: BSTEAD, FBMKLCI-HG, FBMKLCI-HK, FBMKLCI-HL, FBMKLCI-HM, FBMKLCI-HS, FBMKLCI-HT, FBMKLCI-HW, KULIM, LITRAK, LUXCHEM
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