Stocks on Bursa Malaysia continued their downtrend at the close yesterday, tracking the weak performance of regional markets and Wall Street. Investors were worried about the Euro-zone debt crisis, with Italy expected to be the next country that may need a rescue package. The FBM KLCI fell 10.48 points, or 0.66%, to close at 1,578.10. Losers beat gainers by 602 to 167 while 288 counters were unchanged. A total of 832.79 million shares, valued at RM1.55 billion, were traded yesterday against 712.48 million shares worth RM1.293 billion on Monday.
The FBM KLCI opened 0.89 points lower at 1,587.69 and continued to slide lower throughout the day to touch the intra-day low of 1,574.52 before rebounding slightly to close off low at 1,578.10. Chart-wise, the FBM KLCI formed a bearish long black candlestick which indicates that sellers were dominant for the day. With this bearish move, the key index is likely to continue sliding lower to test the next lower support at 1,566.
MACD slid lower, indicating an increase in the downward momentum. RSI (14) was lower at 56.2, sliding from the bullish to the mildly bullish zone. Stochastic also slid lower to 74.5, breaking below the 80-level, indicating the beginning of a new short term down cycle. Readings from the indicators showed that the momentum and market strength of the FBM KLCI had already started to turn weak, which reflects the current correction, and the weakness is likely to continue in the near term.
The short term trend of the FBM KLCI has turned southward, as the key index has already closed below the short term 5 and 10-day moving averages (MA). And this short term downtrend is likely to continue with the FBM KLCI moving lower to test the 30-day MA support at 1,566. The medium and longer term uptrend, is however, still intact. Immediate support zone is at 1,574 to 1,566 while the resistance zone is at 1,580 to 1,597.
Overnight, the Dow fell -58.88 points or -0.47% to close at 12,446.88. Today, the FBM KLCI is likely to trade within a range of 1,559 to 1,601.
This week's expected range: 1565 – 1614
Today’s expected range: 1559 – 1601
Resistance: 1586, 1594, 1601
Support: 1559, 1566, 1572