Stocks on Bursa Malaysia remained in the red at the end of trading last Friday with the benchmark index closing lower as investors remained cautious on the possibility of slower growth for the local economy. The FBM KLCI ended 11.07 points, or 0.75% lower at 1,454.40. On a week-to-week basis, the FBM KLCI declined 14.35 points from previous Friday's closing of 1,468.75. Decliners led advancers by 588 to 197, while 258 counters were unchanged. Turnover declined to 1.46 billion shares, worth RM1.20 billion from Thursday’s 1.586 billion shares valued at RM1.175 billion. Total weekly volume rose to 10.924 billion shares worth RM7.286 billion from 9.203 billion units valued at RM6.049 billion the previous week.

The FBM KLCI was basically in correction and consolidation mode the whole of last week. It rose 10.12 points to 1,478.87 on Monday, but slipped 1.65 points to 1,477.22 on Tuesday due largely to the European debt woes. The FBM KLCI hit the intra-week high of 1,487.37 on Wednesday but pulled back to close 0.38 point lower at 1,476.84. The correction continued into Thursday and Friday where the key index ended the week at its lowest point of 1.454.40.

On the weekly chart, the FBM KLCI formed a bearish black candlestick which closed at the lowest point of the week and was down for the third consecutive week. This indicates that the key index is still in the correction phase after the recent run up and is likely to continue to consolidate. If the psychological support at 1,450 could not hold, the key index is likely to slide further down to test the 1,433 support provided by the 10 and 100-day moving averages (MA). 

On the daily chart, The FBM KLCI formed a bearish black candlestick with long upper shadow, and was down for the third consecutive days. The candlestick formation indicated that the key index is still in consolidation and is likely to continue doing so. Immediate support zone is at 1,450 to 1,431-point level, provided by the 40, 50 and 60-day moving averages. If this support zone could not hold, the next likely target is the 38.2% and the 50% Fibonacci retracement levels located at 1,423 and 1,401, measuring from the pivot low of 1,310 to the pivot high of 1,493. 

Weekly MACD continued to move higher after making the golden cross but is tapering off, indicating a reduction in the upward momentum. Daily MACD, however, continued to slide lower, indicating the key index has entered the consolidation phase on the daily chart. Weekly RSI (14) was lower at 45.6, indicating the weekly relative strength is still mildly bearish. Daily RSI (14) fell to 47.7, crossing below the 50-level for the first time after crossing above it on October 11, indicating the daily relative strength has again turned mildly bearish. Weekly Stochastic was higher at 71.8, but is tapering off, indicating a slow down in the weekly strength. The daily Stochastic, however, continued to slide lower to 31.8, indicating the loss in daily market strength and continuation of the daily down cycle. Readings from the weekly and daily indicators showed that the FBM KLCI is currently in a consolidation phase which might extend until there are signs that it is over.

The short term trend of the FBM KLCI has turned down, whereas the medium term trend is sideways, while the long term trend is also sideways with a bearish bias. The immediate critical support zone is at 1,450 to 1,431 while the overhead resistance zone is at 1,468 to 1,488. Technically, the FBM KLCI has entered a correction and consolidation phase, and as school holiday had started, the overall market is likely to gradually go slow supported by the dwindling volume over the last few days. 

Last Friday, the Dow rose +25.43 points or +0.22% to close at 11,796.16. This week, the FBM KLCI is likely to trade within a range of 1,410 to 1,520, and for today, it is likely to trade within a range of 1,435 to 1,483

This week's expected range: 1410 – 1520

Today’s expected range: 1435 – 1483

Resistance: 1464, 1474, 1483

Support: 1435, 1445, 1449