Stocks on Bursa Malaysia closed lower yesterday with the benchmark FBM KLCI ended 20.12 points or 1.13% lower, weighed down by losses in heavyweights as market sentiment took a hit on worries Tenaga Nasional may buy 1MDB’s power assets at lofty prices. Adding to the woes of the local market was in the afternoon session on news about the fall in European equities, tracking Friday's losses on Wall Street, on growing worries about Greece. At close, the FBM KLCI stood at 1,767.38 points, after hovering between 1,764.63 and 1,787.64 throughout the day. Market breadth was negative with losers outpacing gainers by 808 to 129, while 224 counters were unchanged. Total volume rose to 1.85 billion units worth RM1.9 billion from 1.59 billion units worth RM1.94 billion recorded last Friday.
Tracking losses on Wall Street last Friday, the FBM KLCI opened 0.48 of a point lower at 1,787.02 and rebounded to hit the intra-day high of 1,787.64 briefly after opening, and selling pressure which emerged dragged the key index lower for the rest of the day to hit the intra-day low of 1,764.63, losing 22.87 points at its worst. Nonetheless, some last minute bargain hunting activity managed to lift the FBM KLCI from the low to close slightly higher. Chart-wise, the FBM KLCI formed a bearish long black candlestick which indicates heavy selling pressure for the day and continuation of the current downtrend. Hence, the FBM KLCI is likely to continue its southward journey to look for lower support. Immediate downside support zone is at 1,764 to 1,750, while the overhead resistance zone is at 1,774 to 1,787.
MACD continued to slide southward and is below the signal-line as well as the zero-line, and its histogram extended southward strongly, indicating a bearish outlook and a strong increased in the downward momentum. RSI (14) plunged lower to 29.4 from 35.2, indicating the key index is turning very bearish and is entering the early oversold zone. Stochastic slipped lower to 7.5 from 15.1, indicating very weak index strength and continuation of the down cycle, and is oversold. Readings from the indicators showed that the FBM KLCI is weak and bearish, and hence, is likely to further correct downward. Nonetheless, a technical rebound might be expected as the index is oversold.
The trend of the FBM KLCI is down and bearish as the key index is closing below the short, medium and long term moving averages. On top of that, the FBM KLCI has also breached the long term supporting trend line of the uptrend channel measuring from the pivot low of 801.27 on October 28th, 2008 and this really painted a bearish and bleak outlook for the FBM KLCI. The FBM KLCI rebounded from the 720-day SMA yesterday after hitting it at 1,764-point and a further breach of this very long term support will see the key index sliding lower to the next lower support zone at 1,755 to 1,746, where 1,746 is the 61.8% Fibonacci Retracement support level for the range measuring from the pivot low of 1,671.82 to the pivot high of 1,867.52. A strong technical rebound maybe expected at the 61.8% Fibonacci Retracement support level of 1,746.
Overnight, U.S market was closed for Memorial Day holiday. Over in Europe, the DAX fell 49.58 points or -0.42% to close at 11,815.01. Today, the FBMKLCI is likely to trade within a range of 1,735 to 1,810.
This week's expected range: 1727 – 1866
Today’s expected range: 1735 – 1810
Resistance: 1781, 1796, 1810
Support: 1735, 1750, 1758
Stocks to watch: EWEIN, FBMKLCI-HB, FBMKLCI-HD, FBMKLCI-HE, FBMKLCI-HF, FBMKLCI-HG, FBMKLCI-HH, FBMKLCI-HI, FBMKLCI-HJ, GRANFLO, HAPSENG, HEVEA, JHM, MJPERAK
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