Stocks on Bursa Malaysia ended lower yesterday in line with other regional bourses as investors took profits on the back of heightened Euro-zone debt crisis worries. Heavyweights such as Sime Darby and Tenaga, which contribute significant weightage to the FBM KLCI, were among the top losers. The FBM KLCI ended the day 25.41 points or 1.73% lower at 1,439.94 after opening 5.77 points lower at 1,459.58. Losers led gainers by 705 to 145 while 173 counters were unchanged. Total market volume dropped to 1.36 billion shares, valued at RM1.37 billion, from Monday's 1.78 billion shares worth RM1.75 billion.
Following the weak performance on Wall Street overnight, the FBM KLCI opened 5.77 points lower at 1,459.58 and continued to slide lower throughout the day to hit the intra-day low of 1,433.97, losing 31.38 points at its worst, before rebounding slightly near closing on bargain hunting of selected heavyweights. Chart-wise, the FBM KLCI formed a bearish long black candlestick which indicates heavy selling pressure and sellers were dominant. The key index has closed the gap formed on Monday which indicates exhaustion of the recent rally, and hence, the index might continue to correct or consolidate itself. Immediate support is at 1,433, if this support level could not hold, then the key index might revisit the 1,423 support level.
MACD continued to climb higher and has crossed the zero-line, flashing a buy signal. However, its histogram has turned shorter, indicating a reduction in the upward momentum. RSI (14) has turned down drastically to 54.9, indicating the short term relative strength has fallen back to be mildly bullish from the bullish state on Monday. Stochastic was lower at 90.7, and has crossed below the slow stochastic line, reflecting the pullback correction as forecasted. Readings from the indicators showed that the FBM KLCI is undergoing a short term pullback correction; nonetheless, as the short term undertone has turned mildly bullish, the key index might continue its upward move after the correction is over.
The short term trend of the FBM KLCI remained up, while the medium trend has again turned down, as the key index was again closing below the 50 and 60-day moving averages, and the long term outlook remained bearish technically. Immediate overhead resistance zone is at 1,448 to 1,466 while the downside support zone is at 1,433 to 1,420. With the overall volume staying above the 1 billion shares mark, the market is likely to remain mildly active with rotational play on the second and third liners. Overnight, the Dow rose +180.05 points or +1.58% to close at 11,577.05. Today, the FBM KLCI is likely to trade within a range of 1,403 to 1,486.
This week's expected range: 1371 – 1504
Today’s expected range: 1403 – 1486
Resistance: 1455, 1470, 1486
Support: 1403, 1418, 1429