Stocks on Bursa Malaysia closed lower yesterday as heavy selling across the board particularly in heavyweight counters dragged the benchmark index to close sharply lower. The local bourse traded lower for the whole trading session, triggered by the steep fall in the Dow Jones, which fell 3.1% last Friday, and exacerbated by lingering domestic concerns, and also tracked the sharp fall in regional peers on the back of battered sentiment in Chinese shares, coupled with the weaker ringgit. The FBM KLCI fell 42.53 points, or 2.7%, to close at the day’s low of 1,532.14, after fluctuating between 1,532.14 and 1,554.08 throughout the day. Losers overwhelmed gainers by 941 to 100 with 155 counters unchanged. Total volume rose to 2.58 billion units valued at RM2.49 billion from 1.79 billion units at RM2.13 billion on last Friday.
Taking cue from the 530.94 points or -3.12% fall of the Dow on last Friday, the FBM KLCI opened 21.42 points lower at 1,553.25 and slipped lower for the rest of the day with mild intermittent rebound. The key index was moving sideways in narrow range above 1,540-point for most part of the day, but a last minute sell-down dragged the index to close at the lowest point of the day. Chart-wise, the FBM KLCI formed a bearish long black candlestick with a downside breakaway gap which indicates the beginning of a new downtrend leg after consolidating above the 1,562-point support last week. Hence, the FBM KLCI is likely to continue its downward move to slide lower today. Immediate downside support zone is at 1,524 to 1,502, while the overhead resistance zone is at 1,554 to 1,562.
MACD slipped lower drastically, and its histogram also extended southward strongly after contracting upward for four consecutive bars, indicating an abrupt increased in the downward momentum. RSI (14) was sharply lower at 19.6 from 24.1, indicating the key index is turning extremely bearish from a very bearish state, and is strongly oversold. Stochastic hooked downward to 5.9 from 9.8 and made a dead-cross over the slow stochastic line, issuing a stochastic sell signal and indicated a very weak and bearish state of the FBM KLCI. Readings from the indicators showed that the FBM KLCI is currently extremely bearish and oversold, and hence is likely to slide lower but a technical rebound is imminent.
The technical picture of the FBM KLCI still remained down and bearish, and with the downside breakout yesterday, the FBM KLCI is likely to slide lower towards the next lower support zone of 1,500 to 1,450. Based on Elliott wave and Fibonacci study, the current down-leg will have downside target of 1,525 (38.2% FP), follows by 1,504 (50% FP), 1,482 (61.8% FP), 1,456 (76.4% FP) and 1,413 (100% FP). A projection of the trend-line support measuring from the pivot low of 1,234 on February 8th 2010 to the pivot low of 1,310 on September 1st 2011 gives a support at around 1,510-point.
Overnight, the Dow plunged another 588.40 points or -3.57% to close at 15,871.35. Today, the FBMKLCI is likely to trade within a range of 1,502 to 1,576.
This week's expected range: 1518 – 1632
Today’s expected range: 1502 – 1576
Resistance: 1546, 1551, 1576
Support: 1502, 1517, 1524
Stocks to watch: FBMKLCI-H (Put Warrants)
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