FBM KLCI - down on bearish sentiment
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prices on Bursa Malaysia tumbled to a 16-month low yesterday, dampened
by selling pressure in blue-chips and selected heavyweights, following a
substantive drop in New York's market last Friday. The benchmark
FBMKLCI fell 35.68 points, or 2.06%, to close at 1,697.31, after
declining to as low as 1,695.6 points. Market breadth was negative as
losers trounced gainers by 1,010 to 66, while 116 counters were
unchanged. Total volume increased to 2.06 billion units worth RM2.32
billion from 1.46 billion units worth RM1.78 billion on last Friday.Following a 351 points slump of the Dow on last Friday, the FBMKLCI opened yesterday 17.12 points lower at 1,715.87, the intra-day high, and plunged to the morning session low of 1,698.13 within the first fifteen minutes after opening. The key index rebounded but met resistance at 1,707 point level, and selling pressure in the afternoon session continued to drag the index to the intra-day low of 1,695.60 before rebounding slightly to close off low. Chart-wise, the FBMKLCI formed a bearish black candlestick with a downside runaway gap which indicates a situation of panic selling and players are rushing out. Hence, the FBMKLCI is likely to plunge lower today on continued selling pressure. Immediate downside support zone is at 1,695 to 1,685, while the overhead resistance zone is at 1,700 to 1,715.
MACD plunged lower below the zero-line, and its histogram also extended southward, indicating an increased in the bearish momentum. RSI (14) plunged to 26.8 from 32.8, indicating the key index has entered the RSI oversold zone and is in a very bearish state. Stochastic slipped lower to 4.7 from 14.7 and has made a dead-cross over the slow stochastic line, issuing a bearish sell signal, and indicated very weak index strength and is oversold. Readings from the indicators showed that the FBMKLCI is very weak and bearish, and is oversold, and is likely to slide lower with the possibility of a technical rebound.
The technical picture 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 move, the FBMKLCI has close below the very long term 800-day simple moving average, indicating further correction is expected. As mentioned in yesterday’s analysis, based on Elliott wave projection study, the current impulse C-wave has downside targets of 1,693, follows by 1679 and 1,648. Based on Fibonacci retracement level, a 38.2% Fibonacci retracement support for the range from the pivot low of 1,310 registered on September 26, 2011 to the historical high of 1,896 is at 1,672-point; while a 23.6% Fibonacci retracement support for the range from the pivot low of 801.27 registered on October 28, 2008 to the historical high of 1,896 is at 1,638-point level. These are the key support levels where strong support or reversal can be expected.
Overnight, the Dow fell 99.99 or -0.58% to close at 17,180.84. Today, the FBMKLCI is likely to trade within a range of 1,669 to 1,736.
This week's expected range: 1685 – 1800
Today’s expected range: 1669 – 1736
Resistance: 1710, 1723, 1736
Support: 1669, 1682, 1689
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