Stocks on Bursa Malaysia closed broadly lower yesterday as late selling pressure on some of the key heavyweights pushed the FBM KLCI to close at its day low yesterday, reflecting investor concerns about weaker global sentiments. Losses were mostly seen in banking and plantation stocks as the market fell for the second consecutive day. The FBM KLCI dropped 11.37 points, or 0.77%, to close at 1,465.47 after opening 1.32 points lower at 1,475.52. Losers led gainers by 378 to 344 while 288 counters were unchanged. Turnover fell to 1.586 billion shares valued at RM1.175 billion from 2.03 billion shares worth RM1.47 billion on Wednesday.
The FBM KLCI opened 1.32 points lower at 1,475.52 and rebounded to touch the intra-day high of 1,476.80. However, selling pressure pushed the key index lower to stay in the negative zone throughout the day with intermittent rebound, and late selling pressure on some key heavyweights pressed it to close at the low of the day. Chart-wise, the FBM KLCI formed a bearish black candlestick which indicates heavy selling pressure and the bear was fully in control. With the bearish down move yesterday, the FBM KLCI had broken the lower support of the triangle pattern, and is likely to continue sliding southward. As the key index has also broken the 20-day MA support, it is likely to slide lower to the 30-day MA support area at 1,452.
MACD continued to slide lower, with the histogram getting longer southward, indicating an increase in the downward momentum. Nonetheless, as the MACD is still above the zero-line, the current weakness can be viewed as a short term correction to the strong up move from 1,310 to 1,493. RSI (14) was lower at 51.9, indicating the short term relative strength is turning neutral. Stochastic was lower at 52.3, indicating a continuation of the short term down cycle and extension of market weakness. Readings from the indicators showed that the momentum of the FBM KLCI is turning weak for the short term, and the consolidation process may prolong.
The short term trend of the FBM KLCI is sideways with a downward bias as the key index is now closing below the 5, 10 and 20-day moving averages but is still above the 30-day MA, and a close below the 1,452-point level would confirm that the trend has turned down. The critical support zone for the FBM KLCI is at 1,452 to 1,433 provided by the 30 to 60-day MAs. With the volume falling to below 2 billion shares, the market is likely to gradually turn slow in tandem with the consolidation process.
Overnight, the Dow fell -134.86 points or -1.13% to close at 11,770.73. Today, the FBM KLCI is likely to trade within a range of 1,451 to 1,505.
This week's expected range: 1435 – 1516
Today’s expected range: 1450 – 1488
Resistance: 1473, 1481, 1488
Support: 1450, 1457, 1461