Stocks on Bursa Malaysia closed lower yesterday with investors continuously reducing their holdings on the back of rising concerns over spill-over effects of the European debt crisis. Losses were mostly seen in banking and finance-related stocks, like Maybank and CIMB, which were the top contributors to the FBM KLCI in terms of weightage. The FBM KLCI, which opened 13.29 points lower at 1,467.23, ended the day 4.06 points, or 0.27% lower at 1,476.46. Decliners led advancers by 434 to 376 while 257 counters were unchanged. Total volume decreased to 1.144 billion shares valued at RM2.3 billion from 1.59 billion shares valued at RM3.298 billion on Wednesday. 

Taking cue from the heavy losses on Wall Street overnight, the FBM KLCI opened with a down gap of 13.29 points at 1,467.23 and plunged to the intra-day low of 1,454.52 within the first two minutes of trading, losing 26 points at its worst, and the key index rebounded strongly on bargain hunting to climb higher. It hit the intra-day high of 1,479.41 before easing to close off high. Chart-wise, the FBM KLCI formed a piercing-line candlestick, a bottom reversal candlestick pattern, which indicates fight back by the bulls after the initial sell off on fear. The FBM KLCI actually slid to hit the long term 360-day moving average (MA) and staged a strong rebound. The positive sign is that the key index is able to close above the critical 1,474-point horizontal support level after piercing through it. With the appearance of three white candles overlapping in the last three days, the FBM KLCI might have seen its bottom for the time being, and today, it is likely to continue with its upward momentum to move higher. 

MACD continued to slide lower, but is tapering off, giving out a subtle sign of waning downward momentum. RSI (14) hooked downward gently to 21.9, indicating the key index is still very bearish, but the downward move is weakening. Stochastic, however, continued to climb higher to 37.1, and is in divergence to the main index’s direction, indicating a gradual improvement of the short term market strength. Readings from the indicators showed that the downward momentum of the FBM KLCI is weakening, and may stage rebound rally. 

The trend of the FBM KLCI is currently down. However, the price action of the key index over the last three days showed that it is stabilizing at current level. Judging from the dwindling volume over the last three day, the selling pressure is gradually weakening, and the FBM KLCI may stage a rebound to move higher. Immediate overhead resistance zone is at 1,480 to 1,496, while the immediate downside support zone is at 1,474 to 1,454. 

Overnight, the Dow rose +423.37 points or +3.95% to close at 11,143.31. Today, the FBM KLCI is likely to trade within a range of 1,435 to 1,505. 

This week's expected range: 1453 – 1553 

Today’s expected range: 1435 – 1505 

Resistance: 1486, 1496, 1505 

Support: 1435, 1445, 1460 

Stocks to watch: MAS, MUHIBAH