Stocks on Bursa Malaysia extended Tuesday's losses yesterday in line with weaker regional bourses as US stocks plunged overnight on poor economic data. The faltering US economy, despite avoiding a debt default, would continue to affect regional markets on concerns of the impact of a slowdown in global exports and manufacturing activities. The FBM KLCI lost 9.75 points or 0.63% to 1,545.10 after opening 5.36 points lower at 1,549.49. Losers outnumbered gainers by 514 to 259 while 280 counters were unchanged. Turnover increased to 1.165 billion shares worth RM1.751 billion from 903.522 million shares worth RM1.437 billion on Tuesday.
Taking cue from the weak performance of Wall Street overnight, the FBM KLCI opened with a down gap of 5.36 points at 1,549.49 and plunged to the intra-day low of 1,538.95 within the first forty five minutes, losing 15.9 points at its worst. The key index then rebounded to gradually recover some lost ground before ending at 1,545.10. Chart-wise, the FBM KLCI formed a hammer candlestick, which indicates sellers were selling irrationally on fear factor initially, but buyers later surfaced to pick up stocks at lower level and lifted the key index. As expected, the FBM KLCI slid to the support level of 1,539 and rebounded to close above the critical support of 1,544-point level. The key index may continue its rebound to climb higher today, but strong resistance is expected at 1,550 to 1,560 levels. A close above the 1,560-point level is important for reversing the current downtrend.
MACD continued to slide lower into the negative zone, indicating a pick up in the downward momentum. RSI (14) continued to slide lower to 37, indicating the relative strength of the key index is turning more bearish. Stochastic, however, bucked the trend and continued to move higher to 25.5 from 23.2, indicating a possible bottom of the current down cycle. Readings from the indicators showed that the FBM KLCI is currently still weak, but there are signs that it may take a breather at this level to consolidate itself.
The short term trend of the FBM KLCI remained down, while the medium term trend may turn sideways, and the longer term trend is still up. Immediate overhead resistance zone is at 1,550 to 1,560 while the downside support zone is at 1,539 to 1,530.
Overnight, the Dow rebounded +29.82 points or +0.25% to close at 11,896.44. Today, the FBM KLCI is likely to trade within a range of 1,529 to 1,560.
This week's expected range: 1520 – 1586
Today’s expected range: 1529 – 1560
Resistance: 1550, 1555, 1560
Support: 1529, 1534, 1539