Stocks on Bursa Malaysia finished broadly lower yesterday in tandem with other regional markets, which also witnessed earlier gains wiped off in a knee-jerk reaction after Moody's cut Japan's credit rating. The market fell abruptly as investors realised that the downgrade will have a negative effect on the rest of Asia. The FBM KLCI dipped 13.22 points, or 0.89%, to 1,469.15, way off the day's high of 1,487.27, which was spurred by overnight gains on Wall Street on speculation of a stimulus plan to boost the US' faltering growth. Decliners outnumbered advancers by 528 to 209 while 924 counters were unchanged. A total of 892.35 million shares worth RM1.86 billion were traded yesterday, up from 875.52 million shares valued at RM1.76 billion traded on Tuesday.
Taking cue from the strong gain on Wall Street overnight, the FBM KLCI opened 2.78 points higher at 1,485.15, but encountered profit-taking activity which pushed it into the negative territory briefly, and the key recovered gradually to touch the intra-day high of 1,487.27 near noon. On the opening bell of the afternoon session, the FBM KLCI started to plunge lower in tandem with other regional markets to close at the lowest point of the day. Chart-wise, the FBM KLCI formed a bearish engulfing candlestick which indicates the bears were in control of the day. The appearance of this bearish reversal candlestick pattern after a rebound indicates the market is still jittery, and the key index is likely to move lower to test the support at 1,464, 1,458 and 1,450-point levels. If these immediate support levels could not hold, then the FBM KLCI is likely to re-visit the recent low of 1,423.
MACD again turned downward, indicating a pick up in the bearish momentum. RSI (14) re-hooked downward to 31.3, indicating a loss in the relative strength, and is still in the bearish zone. Stochastic continued to slide lower to 41.9, indicating a continued loss in the market strength and the down cycle is in continuation. Readings from the indicators showed a bearish outlook for the FBM KLCI, and more weaknesses is expected ahead.
The trend of the FBM KLCI remained down and the outlook is bearish. Immediate downside support zone is at 1,467 to 1,450, with 1,458 being the long term 360-day moving average support level. If this level could not hold, then the FBM KLCI would turned long term bearish and there will be more downside to come, and a possible target is 1,410, the 23.6% Fibonacci retracement level measuring from the pivot low of 801 to the pivot high of 1,597.
Overnight, the Dow rose another +143.95 points or +1.29% to close at 11,320.71. Today, the FBM KLCI is likely to trade within a range of 1,444 to 1,505.
This week's expected range: 1438 – 1524
Today’s expected range: 1444 – 1505
Resistance: 1481, 1493, 1505
Support: 1444, 1457, 1463