Stocks on Bursa Malaysia ended lower yesterday as sentiment remained bearish amid concerns over a possible global economic recession. Regional markets also fell following weak China economic data and Europe and US debt crisis which were derailing growth in Asian countries. However, some bargain-hunting helped the FBM KLCI narrow losses with the market barometer closing 4.82 points or 0.34% easier at 1,433.17. Decliners led advancers by 450 to 281 while 271 counters were unchanged. Volume increased to 1.51 billion shares worth RM1.13 billion from 1.27 billion shares worth RM1.04 billion recorded on Tuesday.
The FBM KLCI opened 2.35 points lower at 1,435.64 on weak US market performance overnight, and plunged to the intra-day low of 1,424.19 at mid morning. It hovered near the low for a major part of the day, but late buying on selected blue-chips helped lift the key index to close off low at 1,433.17. Chart-wise, the FBM KLCI formed a black hammer-like candlestick which is a possible bottom reversal signal. However, the black body indicated that the market sentiment is bearish bias. From the candlesticks formed over the last two days, it looks like the FBM KLCI found some support when it approaches the 1,423-point pivot low support area. Nonetheless, the support zone at 1,423 to 1,420 is critical, if this zone cannot hold, it is highly likely that the key index will slide towards the critical psychological support level at 1,400.
MACD continued to slide lower towards the zero-line but is still marginally above it, indicating an increased in the downward momentum. RSI (14) hooked downward slightly to 41.2, indicating the short term relative strength of the FBM KLCI is at the borderline of the mildly bearish zone, and there is a high possibility of it turning bearish. Stochastic has gently hooked up to 11.4 after hitting the low of 8.8 the day before. Nonetheless, it is still below the slow stochastic line and is in the oversold zone, and the short term down cycle is still intact. Readings from the indicators showed that the FBM KLCI is currently weak, with a high possibility of turning more bearish.
The trend of the FBM KLCI remained down and bearish. However, the price action of the key index over the last two days showed that it is trying to stabilize at current level, but whether it can hold well at current level will very much depends on the development of external factors. Immediate downside support zone is at 1,423 to 1,400, while the overhead resistance zone is at 1,439 to 1,450.
Overnight, the Dow fell -236.17 points or -2.05% to close at 11,257.55. Today, the FBM KLCI is likely to trade within a range of 1,409 to 1,455.
This week's expected range: 1410 – 1520
Today’s expected range: 1409 – 1455
Resistance: 1441, 1448, 1455
Support: 1409, 1417, 1425
Stocks to watch: DIGISTA, DIGISTA-WA