Stocks on Bursa Malaysia ended lower yesterday on major sell down by foreign investors, fueled by the weakening ringgit which fell to a new 17-year low, in being quoted at 3.9005/9035 against the greenback at close yesterday. The FBM KLCI fell 30.92 points, or 1.79%, to 1,694.64, after fluctuating between 1,694.64 and 1,722.3 throughout the day. Decliners outnumbered gainers by 686 to 283 with 283 counters unchanged. Total volume rose to 1.65 billion units valued at RM2.02 billion from 1.22 billion units valued at RM1.39 billion on Wednesday.
Taking cue from the weak performance on Wall Street overnight, the FBM KLCI opened 4.71 points lower with a downside breakaway gap at 1,720.85. The key index rebounded to the intra-day high of 1,722.30 briefly after opening but heavy selling pressure continued to drag the FBM KLCI lower to close at the lowest point of the day. Chart-wise, the FBM KLCI formed a bearish long black candlestick which indicates the bears were in full control for the day, and hence, the key index is likely to drop further. Immediate downside support zone is at 1,688 to 1,685, while the immediate overhead resistance zone is at 1,700 to 1,707.
MACD turned downward and its histogram contracted southward substantially, indicating a substantial increase in the bearish momentum. RSI (14) plunged to 40.6 from 51.3, indicating a big change in the index’s relative strength from mildly bullish to a bearish state. Stochastic fell to 39.5 from 73.2 and made dead-cross over the slow stochastic line, issuing a stochastic sell signal and indicated a change in the short term cycle from up to down. Readings from the indicators showed that the FBM KLCI has turned bearish and is likely to further correct downward.
The technical picture of the FBM KLCI still remained the same in that the medium and long term trend is down, while the short term trend is sideways range-bound. Nevertheless, the bearish move of the FBM KLCI yesterday showed that there is an increasing selling pressure, and the key index is likely to slide lower to test the immediate downside support zone of 1,688 to 1,685, and a break of this immediate support zone will see the FBM KLCI sliding lower to test the next critical support at 1,671, which is also the neckline for the bearish Head-and-Shoulder pattern, and a break of this critical support at 1,671 would likely see a downside target of 1,448 for the FBM KLCI in the medium to long term.
Overnight, the Dow fell 120.72 points or -0.69% to close at 17,419.75. Today, the FBMKLCI is likely to trade within a range of 1,657 to 1,749.
This week's expected range: 1677 – 1750
Today’s expected range: 1657 – 1749
Resistance: 1713, 1731, 1749
Support: 1657, 1676, 1685
Stocks to watch: BENALEC, COCOLND, EATECH, FBMKLCI-H, ILB, LONBISC, MUIPROP, NTPM, OWG, PADINI, PWROOT, RAYA, RCECAP, TALIWRK
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