KLCI_20111206Stocks on Bursa Malaysia ended broadly lower yesterday in line with regional bourses influenced by the bearish sentiments following Standard & Poor’s downgrade warning on Europe. S&P warned that it would downgrade 15 Euro-zone countries en masse if European leaders failed to produce a credible plan to solve the region’s debt crisis at a summit later this week. The FBM KLCI fell 9.03 points or 0.61% to close at 1,480.92 after opening 5.14 points lower at 1,484.81. Losers led gainers by 493 to 255 while 281 counters were unchanged. A total of 2.261 billion shares worth RM1.304 billion were transacted compared with Monday’s 2.329 billion shares valued at RM1.333 billion.

The FBM KLCI opened with a down gap of 5.14 points at 1,484.81 and slid to the intra-day low of 1,478.12 within the first thirty minutes, and was hovering near 1,480-point level in a tight range for the rest of the day. Chart-wise, the FBM KLCI formed a bearish black candlestick which confirmed the top reversal signal formed over the previous three sessions. As predicted in the last report that the key index is likely to move lower to cover the gap, and it did. The FBM KLCI is now closing below the short term 5-day SMA and the long term 360-day SMA, hence, is likely to face further selling pressure to fall further. Immediate downside support zone is at 1,478 to 1,466.

MACD was higher but was tapering off, indicating a reduction in the upward momentum, supported by the histogram that turned shorter. RSI (14) has hooked downward to 56.9, indicating a reversal in the relative strength to the mildly bullish zone from the bullish zone. Stochastic has also hooked downward to 79.7 after entering the overbought zone the day before. Readings from the indicators showed that the FBM KLCI is currently undergoing a correction after the recent run up.

The short term trend of the FBM KLCI remained up while the medium and long term trend is still sideways. Judging from the price action, the key index is likely to correct further downward to cover the gap before it resumes its short term uptrend. Immediate downside support zone is at 1,478 to 1,466 and the overhead resistance zone is at 1,485 to 1,493. With no new catalyst to boost the market, the overall market is likely to continue to be dominated by rotational play in the third liners stocks. Overnight, the Dow rose another +52.30 points or +0.43% to close at 12,150.13. Today, the FBM KLCI is likely to trade within a range of 1,471 to 1,492.

This week's expected range: 1410 – 1568
Today’s expected range: 1471 – 1492

Resistance: 1485, 1488, 1492
Support: 1471, 1474, 1477