FBM KLCI - bearish outlook
Stocks
on Bursa Malaysia closed lower across the board yesterday dragged down
by the weaker oil prices coupled with discouraging manufacturing data
from China, and fund selling of Petronas related stocks and banks,
making it one of the worst days for the stock market this year. At
close, the FBMKLCI fell 42.62 points or 2.34% to end at 1,778.27, after
hovering between 1,821.52 and 1,768.21 throughout the day. Market
breadth was negative with losers outpacing gainers by 980 to 82 while
151 counters were unchanged. Total volume rose to 2.76 billion units
worth RM2.95 billion from 1.87 billion units worth 1.99 billion on
Friday.The FBMKLCI opened 0.63 of a point higher at the intra-day high of 1,821.52 and plunged lower on heavy selling pressure for the rest of the day. The key index hit an intra-day low of 1,768.21, losing 52.68 points at its worst, before rebounding slightly to close off low on mild bargain hunting activity. Chart-wise, the FBMKLCI formed a bearish long black candlestick which indicates heavy selling pressure for the day. Hence, the FBMKLCI is likely to continue to correct downward today on follow through selling. Immediate downside support zone is at 1,768 to 1,766, while the overhead resistance zone is at 1,795 to 1,805.
MACD plunged below the zero-line and made a dead-cross over the signal-line, issuing a sell signal and indicated an increased in the bearish momentum. RSI (14) plunged lower to 33.7 from 47.4, indicating the short term relative strength of the FBMKLCI has turned bearish. Stochastic was lower at 31.7 from 63.8, indicating the key index has turned weak and continued the down cycle. Readings from the indicators showed that the FBMKLCI is weak and bearish, and hence, is likely to further consolidate.
The trend of the FBMKLCI is down and bearish as the key index has closed below the psychological support level of 1,800-point, as well as staying below the short, medium and long term simple moving averages (SMA). The key index has closed below the 500-day SMA yesterday, and hence, more downward pressure is expected ahead and the downtrend is likely to prolong. The outlook for the FBMKLCI has turned bearish and the key index is likely to stage a re-test of the critical support level of 1,766.22, the pivot low formed on October 17, and a break of this critical support level will see the FBMKLCI plunging lower to the 1,750-point, follow by the 1,716-point level, being the 61.8% and 76.4% Fibonacci retracement support level for the range measured from the August 28th 2013 low of 1,660 to the 1,896 record high.
Overnight, the Dow fell 51.44 or -0.29% to close at 17,776.80. Today, the FBMKLCI is likely to trade within a range of 1,703 to 1,874.
This week's expected range: 1768 – 1881
Today’s expected range: 1703 – 1874
Resistance: 1810, 1842, 1874
Support: 1703, 1736, 1757
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