Stocks on Bursa Malaysia closed in the red yesterday, amid mounting fears that Greece could soon default, and there were signs that foreign funds were leaving the Asian region, forcing investors to aggressively sell to avoid losses. Persistent selling in heavyweights and big-cap stocks weighed down the key index, with the benchmark FBM KLCI dropped 10.39 points or 0.72% to 1,437.61 after opening 5.04 points higher at 1,453.04. Losers beat gainers by 583 to 163 while 280 counters were unchanged. Turnover increased to 766.82 million shares worth RM1.31 billion from Tuesday’s 727.19 million shares worth RM876.45 million. 

Taking from the positive close on Wall Street and Europe markets overnight, the FBM KLCI opened with an up gap of 5.04 points at 1,453.04 and surged to intra-day high of 1,455.30 within the first five minutes after opening, heavy selling activity immediately appeared and pressed the benchmark index lower throughout the day to end the day near the day’s low. Chart-wise, the FBM KLCI formed a bearish engulfing candlestick which indicates sellers were in full control for the day. With this very bearish formation on the candlestick and the breaking of the support level at 1,442, the key index is likely to continue its slide to re-visit the next critical support level at 1,423-point. 

MACD continued to slide lower, indicating an increase in the bearish momentum. RSI (14) was lower at 33.3, indicating a continued weakening of the short term relative strength, and the key index remained in the bearish zone. Stochastic plunged lower to 7.6, deep into the short term oversold zone. In the past, whenever the stochastic dip below 10, some rebound rally happened. Readings from the indicators showed that the FBM KLCI is very bearish and weak, and the consolidation process is likely to continue. 

The trend of the FBM KLCI remained down and bearish, and the key index is still trapped in the downtrend channel. To reverse the downtrend, the key index must at least break above the upper channel line at 1,464. Immediate downside support is at 1,423-point level, if the FBM KLCI could not hold at this level, its next target will be 1,410-point level. Overnight, the Dow rose +140.88 points or +1.27% to close at 11,246.73. Today, the FBM KLCI is likely to trade within a range of 1,412 to 1,474. 

This week's expected range: 1427 – 1508 

Today’s expected range: 1412 – 1474

Resistance: 1450, 1462, 1474

Support: 1412, 1424, 1431