Stocks on Bursa Malaysia closed sharply lower yesterday on selling in heavyweights, which dragged the FBM KLCI below the 1,400-point level. The market remained unimpressed and was skeptical that further US Federal Reserve (Fed) action was of any help to revive the stalling US economy and labour market. The FBM KLCI failed to sustain Wednesday’s gain with the benchmark index down 31.23 points, or 2.20%, to close at the day’s low of 1,387.81. Decliners thumped advancers by 802 to 85 while 162 counters were unchanged. Total market volume rose to 874.105 million units valued at RM1.71 billion from 708.059 million units valued at RM1.156 billion on Wednesday. 

Taking cue from the 283 points decline of the Dow overnight, the FBM KLCI opened with a down gap of 5.99 points at 1,413.05 and slid lower throughout the day with intermittent weak rebound, it ended the day at the lowest point of 1,387.81. Chart-wise, the FBM KLCI formed a bearish long black Marubozu candlestick which indicates the bears were in total control for the day, and fear was in action. The strong down move yesterday has broken the support at 1,400 easily, and is likely to continue with its strong downward momentum to slide further southward, the next lower targets for the key index are 1,378, 1350, 1320 and 1300.

MACD continued to slide lower, indicating an increase of the bearish momentum. RSI (14) has re-hooked downward to 25.3 after a rebound to 31.7 the day before, indicating a very bearish relative strength for the key index. Stochastic is at 8.3 and has hooked downward, indicating very weak market strength. Readings from the indicators showed a very bearish picture of the FBM KLCI, and the key index is likely to continue with the current weakness for a while. 

The trend of the FBM KLCI remained down and bearish, and the strong down move yesterday indicates that fears had set in and is likely to push the key index further southward. Immediate downside support zone is at 1,378 to 1,350, where at 1,350 the FBM KLCI may see some strong rebound, as it was a strong support / resistance level before. Overnight, the Dow fell -391.01 points or -3.51% to close at 10,733.83. Today, the FBM KLCI is likely to trade within a range of 1,354 to 1,438. 

This week's expected range: 1380 – 1502

Today’s expected range: 1354 – 1438

Resistance: 1405, 1421, 1438

Support: 1354, 1370, 1379