Stocks on Bursa Malaysia ended broadly lower yesterday in thin trading as the lingering global debt situation continued to influence the performance of global stock markets. Selling pressure emerged as a result of the US and European debt dilemma which saw the FBM KLCI ended 14.67 points or 0.93% lower at 1,562.58, with investors turning cautious and many abstaining from the market. Market breadth was negative with losers outnumbering gainers by 646 to 159 while 268 counters were unchanged. A total of 753.757 million shares, valued at RM1.383 billion, were traded yesterday against 697.71 million shares, valued at RM1.43 billion, recorded last Friday.
The FBM KLCI opened 1.02 points lower at 1,576.23 and slid lower throughout the day to hit the intra-day low of 1,561.97 before ending slightly off low at 1,562.58. Chart-wise, the FBM KLCI formed a bearish long black candlestick which indicates heavy selling pressure on the benchmark index. With the bearish move yesterday, the FBM KLCI had broken the 30-day moving average (MA) support at 1,568 and the horizontal support at 1,566-point level; it is thus likely to continue with its downward move to test the immediate psychological support of 1,550-point level, which happens to be where the 60-day MA lies now. The 1,550-point level is also the 38.2% Fibonacci retracement level for the range from 1,474 to 1,597, hence, it is a critical level to be watched.
MACD continued to slide lower, indicating a continued weakening of the key index’s momentum. RSI (14) plunged lower to 43.2, indicating the FBM KLCI had officially turned bearish for the short term. Stochastic was lower at 33.7, indicating the continued weakening of market strength, and as it has not reach the short term oversold zone yet, the key index is likely to continue its current downtrend. Deteriorating technical readings indicates that the FBM KLCI is likely to extend its current correction.
The short term trend of the FBM KLCI is currently down, while its medium and long term uptrend is still intact. Looking at the current situation, the FBM KLCI is likely to test the medium term uptrend support provided by the 60-day MA at 1,550-point soon, if this level could not hold, then it is likely to slide towards the 120-day support at 1,535-point level, which is also the 50% Fibonacci retracement level.
Overnight, the Dow fell -94.57 points or -0.76% to close at 12,385.16. Today, the FBM KLCI is likely to trade within a range of 1,543 to 1,591.
This week's expected range: 1544 – 1606
Today’s expected range: 1543 – 1591
Resistance: 1572, 1582, 1591
Support: 1543, 1552, 1557