Stocks on Bursa Malaysia closed lower yesterday, in line with weaknesses in regional markets which were spooked by stagnant US job data released last Friday and heightened investors' worry about the state of the world's largest economy. The prolonged Europe debt crisis, particularly in Greece, has affected sentiments in regional markets, and the pessimistic remarks by the World Bank that the global economy was stepping into a new danger zone also added pressure to the market. The FBM KLCI dropped 10.97 points or 0.74% to 1,463.12 after opening 4.32 points easier at 1,469.77. Losers thumped gainers by 526 to 210 while 235 counters were unchanged. A total of 640.321 million shares worth RM1.37 billion changed hands compared with 852.40 million shares worth RM2.315 billion last Friday.
Taking cue from the heavy losses on Wall Street last Friday, the FBM KLCI opened 4.32 points lower at 1,469.77 and was trading sideways in a narrow band in the negative zone throughout the morning session, it touched the intra-day high of 1,471.13. The key index plunged in the afternoon session to close at 1,463.12, the lowest point of the day. Chart-wise, the FBM KLCI formed a bearish Harami candlestick pattern which is a key reversal candle pattern, and the key index is likely to slide lower today to test the immediate lower support zone at 1,460 to 1,442. The support level at 1,458 to 1,461 provided by the 5 and 360-day moving averages are important levels to watch, if these two immediate support levels are breached, then the key index is likely to re-test the 1,450 psychological support level follow by the pivot low of 1,442.
MACD climb marginally higher, and the histogram also turned shorter upward, indicating a reduction in the bearish momentum. However, as the MACD is still below the signal line and is in the negative zone, the improvement may just reflect a technical rebound in a bear trend. RSI (14) hooked down slightly to 37.6, falling back to the bearish zone. Daily Stochastic has hooked up slightly to 28.3, but is still below the slow stochastic line, it is reflecting the recent rebound, and the down cycle is not over yet. Readings from the indicators showed that the momentum of the FBM KLCI has improved slightly but the overall picture is still bearish.
The main trend of the FBM KLCI remained down and bearish. Immediate support zone is envisaged at 1,460 to 1,442, if this zone cannot hold, then the FBM KLCI is likely to re-test the pivot low of 1,423. The total volume traded yesterday has greatly reduced, which indicates a reduction in the overall selling pressure, and the FBM KLCI is likely to continue to consolidate and move range-bound.
US market was closed yesterday for Labor Day holiday. Today, the FBM KLCI is likely to trade within a range of 1,452 to 1,479.
This week's expected range: 1414 – 1521
Today’s expected range: 1452 – 1479
Resistance: 1469, 1474, 1479
Support: 1452, 1457, 1460