Stocks on Bursa Malaysia finished on an easier note yesterday in cautious trading, in tandem with most regional peers amid the slump in global crude oil prices. Crude oil prices extended the decline yesterday as glut fears deepened. US crude crashed to below US$50 (RM177.16) a barrel, while benchmark Brent tumbled to under US$53.The benchmark FBMKLCI fell 20.04 points, or 1.15%, dragged down by losses in selected blue chips, to close at 1,716.58, but off the day’s low of 1,708.78. Losers outpaced gainers by 639 to 180 with 246 counters unchanged. Total volume rose to 1.6 billion units worth RM1.9 billion from 1.5 billion units worth RM1.4 billion on Monday.
Following the slump on Wall Street overnight which saw the Dow losing 331 points, the FBMKLCI opened 5.68 points lower with a downside gap at 1,730.94 and plunged to the intra-day low of 1,708.78 twenty minutes after opening, losing 27.84 points at its worst. The key index rebounded from the low and move sideways range-bound for a major part of the day and climbed higher in mid-afternoon to close off low. Chart-wise, the FBMKLCI formed a bearish black candlestick with a downside runaway gap which indicates fear was dominating the market initially but stabilized later. Hence, the FBMKLCI is likely to further consolidate today with a downward bias. Immediate downside support zone is at 1,708 to 1,700, while the overhead resistance zone is at 1,730 to 1,736.
MACD and its histogram continued to slide lower, indicating further increased in the bearish momentum. RSI (14) was lower at 38.5 from 43.5, indicating the key index has turned bearish from a mildly bearish state. Stochastic slipped lower to 64.3 from 79.4, indicating further weakening of the key index and continuation of the down cycle. Readings from the indicators showed that the FBMKLCI is bearish and is likely to slide lower in the near term.
With bearish move yesterday, the FBMKLCI has again closed below all the short, medium and long term moving averages, indicating the short term uptrend in the last two weeks of December 2014 has ended and the key index has resumed its downtrend. The critical support level to look at is the 1,700-point psychological support level, follow by the pivot low of 1,671 formed on December 17 2014. A break of the 1,700-point psychological support will see the FBMKLCI sliding lower to re-test the 1,671-point critical support level, and a further break of this critical support will see big volatility that drive the FBMKLCI lower to the lower support zone of 1,660 to 1,590.
Overnight, the Dow fell 130.01 or -0.74% to close at 17,371.64. Today, the FBMKLCI is likely to trade within a range of 1,684 to 1,753.
This week's expected range: 1710 – 1799
Today’s expected range: 1684 – 1753
Resistance: 1728, 1740, 1753
Support: 1684, 1696, 1706
Stocks to watch: ABRIC, CLIQ, FBMKLCI-HB, JCY, MAXWELL, ORNA, SOLID, SONA, YINSON
Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. The Stocks to watch is not a recommendation to buy or sell the particular stock, as it is only meant for graduates of the "Share Trading the Pro Way" course as case study. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.