FBM KLCI - lower on continued weak sentiment
Stocks
on Bursa Malaysia closed broadly lower yesterday, dragged down by
losses in blue-chips and small-capitalised stocks, in line with weak
market sentiment in other Asian markets, although there was strong
demand for Chinese stocks as the Shanghai-Hong Kong Stock Connect makes
its debut. The benchmark FBMKLCI settled at its intra-day low of
1,806.48, down 7.31 points or 0.04%, after trading as high as 1,814.58.
Losers led gainers by 532 to 245, with 286 counters unchanged. Total
volume decreased to 1.41 billion shares worth RM1.39 billion from 1.64
billion units worth RM1.6 billion on last Friday.Tracking the mild losses on Wall Street last Friday, the FBMKLCI opened 0.26 of a point lower at 1,813.53 and moved in sideways in a tight range. The key index rebounded to hit the intra-day high of 1,814.58 at late morning before falling for the rest of the day on profit-taking activity to end at the lowest point of the day. Chart-wise, the FBMKLCI formed a bearish long black candlestick which indicates selling pressure and the bears were in control for the day. Hence, the FBMKLCI is likely to continue its downtrend to slide lower today. Immediate downside support zone is at 1,801 to 1,795 with 1,800-point as the key psychological support level, and overhead resistance zone is at 1,814 to 1,820.
MACD and its histogram continued to slide lower and are below the zero-line, indicating an increased in the bearish momentum. RSI (14) was lower at 38.7 from 42.1, indicating further loss in the short term relative from mildly bearish to a bearish state. Stochastic dipped lower to 6.85 from 11.3, indicating the key index is very weak and oversold for the short term. Readings from the indicators showed that the FBMKLCI is weak and bearish at the moment, and hence, is likely to further consolidate.
The trend of the FBMKLCI remained down and bearish as the key index continued to stay below the short, medium and long term moving averages. With yesterday’s bearish downward move, the key index is likely to slide lower to test the psychological support of 1800-point today, and a breach of the critical psychological support would also means the key index has broken the 61.8% retracement support level at 1,801, and is likely to slip lower towards the 76.4% retracement support of 1,788. From the view point of Elliott wave study, the current pullback correction over the last two weeks could turn out to be the C-wave of a higher degree with downside targets of 1,728 and 1,648 if the recent pivot low of 1,766 is breached.
Overnight, the Dow rose 13.01 points or 0.07% to close at 17,647.75. Today, the FBMKLCI is likely to trade within a range of 1,795 to 1,822.
This week's expected range: 1780 – 1856
Today’s expected range: 1795 – 1822
Resistance: 1811, 1817, 1822
Support: 1795, 1801, 1803
Stocks to watch: BRAHIMS, EASTLND, IFCAMSC, KIANJOO, MCLEAN, MMSV, PLABS, RAYA, SMRT, TGUAN, VIS
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