FBM KLCI_20111110Stocks on Bursa Malaysia closed sharply lower yesterday as the market pull back after three days of gains, and was in line with the fall on regional markets amid an escalating debt crisis in Europe. Renewed fears over the unresolved debt problem in Italy, which is pressuring the country to seek a bailout, fuelled concerns over its impact on the Euro-zone and global economy. The FBM KLCI fell 16.99 points or 1.14% to 1,472.65 at the close. Losers led gainers by 568 to 227 with 212 counters unchanged. Turnover was lower at 2.644 billion shares worth RM1.462 billion from the 2.677 billion shares worth RM1.818 billion on Wednesday.

Taking cue from the hefty fall on Wall Street overnight, the FBM KLCI opened with a big down gap of 20.41 points at 1,469.23 and plunged to the intra-day low of 1,466.25, losing 23.39 points at its worst. The key index rebounded and recovered some lost grounds, where it touched the intra-day high of 1,474.73 before settling at 1,472.65. Chart-wise, the FBM KLCI formed a bullish small white spinning-top like candlestick which indicates buying support for the key index amid a bearish sentiment, and the key index may continue its rebound today but with limited upside, as the FBM KLCI is now closing below the 5, 10, and 360-day moving averages (MA), and the gap formed yesterday may together post as a strong resistance zone.

MACD has hooked downward, and the histogram also turned shorter, indicating a loss in the momentum. Nonetheless, the MACD is still above the signal-line as well as the zero-line, hence the current weakness may well be just a correction in an uptrend. RSI (14) plunged to 56 from 62.6 a day ago, indicating the relative strength of the key index has turned mildly bullish from bullish. Stochastic has hooked downward to 89.9, reflecting the pullback in the key index, but is still above its slow stochastic line. Readings from the indicators showed that the FBM KLCI is currently undergoing a correction, and nonetheless, the underlying tone is still bullish.

The short term trend of the FBM KLCI is up. However, the pullback yesterday has brought the key index below the 5 and 10-day MA, signifying the immediate short term trend may turn sideways and goes into consolidation. The medium term trend has turned sideways and the long term trend remained bearish. Immediate overhead resistance zone is at 1,475 to 1,481 while the downside support zone is at 1,466 to 1,461. As the week is approaching the weekend, the market may trade cautiously today with the penny stocks likely to continue to dominate the active scene.

Overnight, the Dow rose +112.85 points or +0.96% to close at 11,893.79. Today, the FBM KLCI is likely to trade within a range of 1,459 to 1,484.

This week's expected range: 1433 – 1534
Today’s expected range: 1459 – 1484

Resistance: 1477, 1480, 1484
Support: 1459, 1462, 1467