Stocks on Bursa Malaysia closed lower yesterday on continued foreign fund selling on political concerns amid weaker crude oil prices, market sentiment also dampened by the fallout from the panic in the China stock market where the key indices fell up to 6.75% and spilled over to Hong Kong. The FBM KLCI was down 16.47 points or 0.96% to 1,695.83, after moving between 1,693.35 and 1,706.7 throughout the day. Losers thumped gainers by 827 to 117 with 215 counters unchanged. Total volume rose to 1.99 billion units valued at RM2.25 billion from yesterday’s 1.69 billion units valued at RM1.72 billion.
The FBM KLCI opened 5.83 points lower with a downside runaway gap at 1,706.47 and rebounded to touch the intra-day high of 1,706.70 briefly after opening, but heavy selling pressure pushed the key index lower to hit the intra-day low of 1,693.35 at late morning, losing 18.95 points at its worst, before rebounding slightly to recoup some losses. Chart-wise, the FBM KLCI formed a bearish long black candlestick which indicates heavy selling on blue-chips for the day, and hence, the FBM KLCI is likely to slide lower on continued selling pressure. Immediate downside support zone is at 1,693 to 1,688, while the overhead resistance zone is at 1,706 to 1,718.
MACD slipped lower and its histogram also further contracted downward, indicating an increased in the bearish momentum. RSI (14) was lower at 35.3 from 40.5, indicating further loss in the index’s relative strength to the bearish zone from a mildly bearish state. Stochastic plunged to 39.7 from 65.2, indicating the key index is turning very weak and continuation of the down cycle. Readings from the indicators showed that the FBM KLCI is weak and bearish, and is likely to stay bearish in the short term.
The trend of the FBM KLCI still remained down and bearish, and with yesterday’s bearish downward move, the key index has broken the very long term 960-day SMA support which has previously saw the FBM KLCI rebounding from it strongly at 1,671.82 on December 12th 2014, and mild rebound on Monday and Tuesday. Thus, the FBM KLCI is likely to continue its downtrend journey to test the immediate support of 1,688, follow by the all critical support of 1,671.82 in the near term. As was mentioned in Monday’s analysis, the neck-line of the Head-and-Shoulder pattern is around 1,671-point and a break of this neck-line support would see a possible downside target of 1,448 in the medium to long term for the FBM KLCI.
Overnight, the Dow fell 261.49 points or -1.47% to close at 17,515.42. Today, the FBMKLCI is likely to trade within a range of 1,677 to 1,720.
This week's expected range: 1652 – 1788
Today’s expected range: 1677 – 1720
Resistance: 1703, 1711, 1720
Support: 1677, 1685, 1690
Stocks to watch: A&M, ASIAPLY, CHINA50-H1, CHINA50-H2, FBMKLCI-HF, FBMKLCI-HG, FBMKLCI-HH, FBMKLCI-HL, FBMKLCI-HM, HARTA, TOPGLOV
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