Stocks on Bursa Malaysia closed lower across the board last Friday on persistent selling pressure in tandem with weak regional markets, following the plunge on Wall Street overnight amid growing concerns that the global economic recovery is faltering and the European debt debacle may degenerate into a major crisis. The FBM KLCI ended 19.32 points, or 1.29%, lower at 1,483.98. Week-on-week, the benchmark index gained 0.31 of a point from 1,483.67 previously. Losers overwhelmed gainers by 677 to 127 while 231 counters were unchanged. Volume rose to 958.9 million shares valued at RM2.19 billion from 850.55 million shares valued at RM1.71 billion on Thursday, while total weekly volume decreased to 5.067 billion units worth RM8.921 billion from 7.776 billion units valued at RM14.682 billion previously.
The FBM KLCI started last Monday on a stronger footing by opening 2.37 points higher at 1,486.04 and climb higher throughout the day to end the day 16.07 points at 1,499.74. The benchmark index continued its upward momentum on Tuesday morning to hit the intra-week high of 1,510.54 before easing on profit-taking to close 1.5 points lower at 1,498.24. On Wednesday, The FBM KLCI opened 3.97 points higher at 1,502.21 and moved in sideways trend for most part of the day, within a tight range of 1,499.59 to 1,504.63 in the positive zone before ending 4.83 points higher to 1,503.07. The key index eked out a small gain of 0.23 of a point to 1,503.30 on Thursday following a weak regional market, and on Friday, the benchmark FBM KLCI plunged 19.32 points to close the week at 1,483.98.
On the weekly chart, the FBM KLCI formed a black inverted hammer candlestick which indicates the bulls initially tried to push up the key index, but later in week, the bears appeared to press down the index. As the FBM KLCI continued to close below the 60-week moving average (MA), together with the black inverted hammer candlestick, it is likely that the key index will continue its downward move to test the immediate support level of 1,474, and the psychological support level of 1,450, which happen to mirrors the 80-week MA. If the 1,450-point support level could not hold, then the key index will move lower to re-visit the recent low of 1,423. The likely downside target is the 23.6% Fibonacci retracement level at 1,410-point, measuring from the pivot low of 801 to the pivot high of 1,597, and this level also coincided with the 100-week MA which shall serve as a strong support level.
On the daily chart, the FBM KLCI opened with a down gap of 11.63 points and slid to the intra-day low of 1,477.70 before rebounding to close at 1,483.98, forming a bearish black candlestick which closed just below the mid point of the day’s range. This suggests the selling pressure was strong, and the key index is likely to continue sliding lower today. A critical support level to watch is the 1,474-point level, and the 23.6% Fibonacci retracement level at 1,464-point level, measuring from the pivot high of 1,597 to the pivot low of 1,423, may also serve as an immediate support. As the key index is now closing below the 300-day MA, it is likely that the FBM KLCI will move lower to test the support of the 360-day MA at 1,457-point if the other two support levels could not hold.
Weekly MACD continued to slide lower, indicating an increase in the weekly downward momentum. Daily MACD has hooked downward after turning upward for four days, marking an end to the technical rebound. Weekly RSI (14) hooked up marginally to 38.3, reflecting the weak rebound, and is currently in the bearish zone. Daily RSI (14) turned downward to 32.1, indicating the daily relative strength is bearish. Weekly Stochastic continued to slide lower to 31.5, indicating a continuation of the weekly down cycle and weakness. Daily stochastic has hooked downward for the first time after rising for almost eight sessions, indicating a possible end of the rebound rally. Readings from the indicators showed that weakness and bearishness of the FBM KLCI still prevails, and the current downtrend may prolong.
The FBM KLCI already entered a bear phase as the key index continued to stay below the long term 200, 240 and 300-day MAs. With the external negative factors continue to unfold the benchmark index is likely to further consolidate. Hence, it is advisable to stay at the sidelines until a clearer picture emerges before taking any position. Any near term rallies should be viewed as an opportunity to reduce exposure pending a more substantial downward correction.
Last Friday, the Dow fell -172.93 points or -1.57% to close at 10,817.65. This week, the FBM KLCI is likely to trade within a range of 1,438 to 1,524, and for today it is likely to trade within a range of 1,463 to 1,506.
This week's expected range: 1438 – 1524
Today’s expected range: 1463 – 1506
Resistance: 1492, 1499, 1506
Support: 1463, 1470, 1477