Stocks on Bursa Malaysia closed lower broadly yesterday with the benchmark FBM KLCI ended lower for the third consecutive days on continuous selling activities in heavyweights, mainly finance-related stocks. The FBM KLCI fell 11.57 points or 0.65% to close at 1,778.16, after fluctuating between 1,774.97 and 1,787.23 throughout the day. Losers trounced gainers by 523 to 321 with 296 counters unchanged. Total volume eased slightly to 2.5 billion shares worth RM2.23 billion compared to 2.53 billion shares worth RM2.31 billion on Tuesday.
Following the weak close on Wall Street overnight which saw the Dow plunging 332.78 points or 1.85% to 17,662.94, the FBM KLCI opened 6.26 points lower with a downside runaway gap at 1,783.47 and plunged lower to hit the intra-day low of 1,774.97 fifteen minutes after opening, losing 14.76 points at its worst. The FBM KLCI rebounded strongly in the next twenty minute to touch the intra-day high of 1,787.23, but the rebound could not sustain, and the key index slipped lower on continuous selling pressure. Chart-wise, the FBM KLCI formed a bearish black spinning-top like candlestick which indicates the bears were dominant for the day amid consolidation. Hence, the FBM KLCI is likely to further consolidate today. Immediate downside support zone is at 1,775 to 1,770, while the overhead resistance zone is at 1,787 to 1,800.
MACD and its histogram continued to slide southward, indicating an increased in the bearish momentum. RSI (14) slipped lower to 38.8 from 43.8, indicating the FBM KLCI has turned bearish for the short term. Stochastic plunged lower to 18.4 from 30.9, indicating a very weak state of the key index, and is entering the stochastic oversold zone. Readings from the indicators showed that the FBM KLCI is getting bearish and weak but was oversold. Hence, a technical or oversold rebound might be expected ahead.
The short term trend of the FBM KLCI is down as the key index continued to stay below the short term moving averages. The has also closed below the 50-day simple moving average (SMA), indicating the medium term trend is under challenge now, and a further break of the 60-day SMA currently at 1,771 would see the FBM KLCI plunging lower to the next lower support zone of 1,760 to 1,750. The long term trend has again turned bearish as the key index has closed below the 120 and 100-day SMA yesterday. Hence, the outlook for the FBM KLCI is bearish for the short term, and sideways range-bound within a range of 1,671 to 1,831 for the medium to longer term.
Overnight, the Dow fell 27.55 points or -0.16% to close at 17,635.39. Today, the FBMKLCI is likely to trade within a range of 1,760 to 1,799.
This week's expected range: 1769 – 1852
Today’s expected range: 1760 – 1799
Resistance: 1785, 1792, 1799
Support: 1760, 1767, 1773
Stocks to watch: ABRIC, ANCOMLB, AT, EG, FLBHD, GENETEC, IRCB, JCY, KUB, LEESK, LEWEKO, LONBISC, MPAY, MAXWELL, OPCOM, PWROOT, PRLEXUS, SCH, SCOMNET, TPC, XOX, YINSON
Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. The Stocks to watch is not a recommendation to buy or sell the particular stock, as it is only meant for graduates of the "Share Trading the Pro Way" course as case study. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.