Stocks on Bursa Malaysia ended lower yesterday on heavy selling across the board particularly of blue chips. The local bourse remained bearish with sentiment continuing to be plagued by the weakening ringgit against the greenback, slowdown in China’s economy, devaluation of the Chinese yuan, weakening of oil prices, and nagging domestic concerns. Asian equities were mostly lower, weighed down by the possibility of China allowing the yuan to depreciate further. The FBM KLCI fell 24.28 points or 1.52% to 1,572.54 after hovering between 1,569.19 and 1,594.46 throughout the day. Losers trounced gainers by 836 to 149 with 215 counters unchanged. Total volume rose to 2.06 billion units valued at RM1.95 billion from 2.01 billion units valued at RM2.2 billion last Friday.
The FBM KLCI opened 6.01 points lower at 1,590.81 and rebounded to hit the intra-day high of 1,594.46 twenty five minutes after opening. However, the rebound was met with strong resistance and the key index fell on heavy selling pressure to hit the intra-day low of 1,569.19 near noon, losing 27.63 points at its worst. The FBM KLCI recovered slightly in the afternoon session to 1,576.26 just before closing. However, a last minute sell down dragged the index to close near the low. Chart-wise, the FBM KLCI formed a bearish long black candlestick with a downside runaway gap which indicates sellers were rushing out at the opening and were in control for the day. Since the index was closing near the lower end, the FBM KLCI is likely to continue its downtrend to slide lower to the next lower support zone of 1,561 to 1,550.
MACD and its histogram slid further southward, indicating a continued increase in the bearish momentum. RSI (14) was lower at 22.2 from 25.1, indicating the key index was getting very bearish and was oversold. Stochastic hooked downward to 5.9 from 7.2, indicating a turn and continuation of the bearish cycle after a short rebound. Readings from the indicators showed that the FBM KLCI is in a very bearish state and is likely to further correct downward until a strong bottom reversal signal is seen.
The trend of the FBM KLCI still remained down as the key index continued to stay below the short, medium and long term moving averages. Based on the price action yesterday, selling pressure is still strong, and hence, the FBM KLCI is likely to continue its downtrend until the selling pressure depleted. Based on Elliott wave and Fibonacci study, the FBM KLCI is currently on the wave-5 of the bigger wave-C, with a projected downside targets of 1,561 (100% FP), follows by 1,512 (127.2% FP), 1,491 (138.2% FP), 1,470 (150% FP) and 1,448 (161.8% FP) based on Fibonacci projection (FP) for the impulse wave starting from 1,867.53. And for the retracement support from 1,671 to 1,867, the immediate support is at 1,550, the 161.8% Fibonacci retracement support level. Hence, a strong support or rebound is expected at the Fibonacci support zone of 1,550 to 1,561.
Overnight, the Dow rose 69.15 points or 0.40% to close at 17,477.40. Today, the FBMKLCI is likely to trade within a range of 1,537 to 1,619.
This week's expected range: 1485 – 1701
Today’s expected range: 1537 – 1619
Resistance: 1588, 1604, 1619
Support: 1537, 1553, 1563
Stocks to watch: COCOLND, FBMKLCI-HG, FBMKLCI-HK, FBMKLCI-HL, FBMKLCI-HM, FBMKLCI-HO, FBMKLCI-HS, FBMKLCI-HT, FBMKLCI-HU, FBMKLCI-HV, FBMKLCI-HW
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