Stocks on Bursa Malaysia closed sharply lower yesterday, reflecting the gloomy sentiment in regional markets that remained concerned with the unresolved Euro-zone debt crisis. The bearish statement made by China’s vice-premier, Wang Qishan, that the global economic outlook remained grim and of an impending global recession also affected the market. The FBM KLCI fell 20.32 points or 1.40% to 1,434.08 after opening 2.64 points lower at 1,451.76. Decliners led advancers by 661 to 176 while 194 counters were unchanged. Total volume decreased to 1.416 billion shares worth RM1.161 billion from 1.462 billion shares worth RM1.196 billion last Friday.
The FBM KLCI opened with a down gap of 2.64 points at 1,451.76 and slid lower throughout the day to end the day at the lowest point on bearish sentiment. Chart-wise, the FBM KLCI formed a bearish long black Marubozu candlestick which indicates the market was falling on fears and liquidation by the bears, and sellers were fully in control. The key index is likely to continue falling further today to test the next lower support zone at 1,423 to 1,420, if this support zone could not hold, then there is a strong likelihood that the FBM KLCI may retreat to the 50% Fibonacci retracement level at 1,401.
MACD continued to slide lower, indicating an increased in the bearish momentum. RSI (14) has dropped further to 41.1, indicating the relative strength of the key index is turning bearish from mildly bearish. Stochastic has fallen lower to 10.6, into the short term oversold zone, indicating the bearish market strength is picking up. Readings from the indicators showed that the FBM KLCI is undergoing a strong pullback correction after the recent 132 points rally from the low of 1,310.53, and the correction is likely to continue for a while until there are signs of settling down.
The trend of the FBM KLCI has again turned down and bearish as the key index is now closing below the short, medium and long term moving averages. The critical support level to watch out is the 1,400-point psychological level, and if this level could not hold, the key index may slide further downward to the 61.8% Fibonacci retracement level at 1,380.
Overnight, the Dow tumbled -248.85 points or -2.11% to close at 11,547.31. Today, the FBM KLCI is likely to trade within a range of 1,410 to 1,470.
This week's expected range: 1410 – 1520
Today’s expected range: 1410 – 1470
Resistance: 1446, 1458, 1470
Support: 1410, 1422, 1428