Stocks on Bursa Malaysia continued their downtrend yesterday following selling pressure before ending on an easier note, as some bargain hunting activity managed to help cap some of the losses. The FBM KLCI lost 24.85 points, or 1.66%, to 1,472.14 after hitting an intra-day low of 1,423.27, with heavy losses mostly seen in key heavyweights. Losers outnumbered gainers by 828 to 159 while 179 counters were unchanged. Turnover fell to 1.896 billion shares worth RM3.598 billion from 1.937 billion shares worth RM3.612 billion.
Taking cue from the hefty loss of 634 points on the Dow overnight, the FBM KLCI opened with a big down gap of 28.59 points at 1,468.40 and plunged to the intra-day low of 1,423.47, losing 73.52 points at its worst, within three minutes after opening. The key index rebounded and gradually recovered its lost ground to touch the intra-day high of 1,490.14 at mid afternoon before closing off high on profit-taking. Chart-wise, the FBM KLCI formed a white high wave Spinning-top candlestick; the appearance of this candlestick after a long downtrend indicates a possible bottom in which the long lower shadow indicates active bargain-hunting activity which lifted the key index off low, and that the key index is closing above its opening price gives it a bullish bias. Hence, it is likely that the FBM KLCI may continue its upward momentum to move higher today.
MACD continued to slide lower, indicating a continuation of the downward momentum. However, it has reached a deeply oversold level, and a rebound may occur soon. The last time MACD reached this deep oversold level was on May 27 2010. RSI (14) plunged lower into the oversold zone and is now at 17.05. The last time RSI reached this level was on May 26 2010 with a reading of 17.03, and the index was at 1,248, a rally started from there and reached an all time high of 1,597 on July 11 2011. Stochastic continued to move higher to 29.06, indicating a possible bottom has been reached, and the possible beginning of a short term up cycle. Readings from the indicators showed that the FBM KLCI is deeply oversold, and a rebound rally is likely to occur soon.
The trend of the FBM KLCI has turned bearish. The key index penetrated the 360-day moving average (MA) to hit the 50% Fibonacci retracement level and rebounded off it strongly, to close above the long term 360-day MA and the 38.2% Fibonacci level. This indicates strong support by the long term investors when prices fall to these long term support area. In order for the FBM KLCI to reverse its current down trend, it has to move back above the 240-day MA which is currently at 1,517, the 200-day MA at 1,530, and the 120-day MA at 1,540.
Overnight, the Dow rebounded +429.92 points or +3.98% to close at 11,239.77. Today, the FBM KLCI is likely to trade within a range of 1,433 to 1,529.
This week's expected range: 1453 – 1553
Today’s expected range: 1433 – 1529
Resistance: 1491, 1500, 1529
Support: 1438, 1452, 1462