FTSE Bursa Malaysia KLCI (.KLSE) plunges to nine-year low as oil prices crash
The oil price rout triggered panic selling on Bursa Malaysia today, with the FBM KLCI plunging as much as 60.45 points or 4.1% to 1,422.65 points at one stage, the biggest drop since the 2008 global financial crisis.
However, the key index managed to claw back some ground to end down 58.94 points 3.97% to 1,424.16 points, the lowest since 2011, erasing RM79.5 billion from market capitalisation. Year to date, it has lost 10.4%.
The sell-off came as oil prices plunged more than 30% following the collapse of talks between Opec and Russia on supply curbs that sent global crude and equity markets crashing. In response to the breakdown in talks, Saudi Arabia, the de facto leader of Opec, slashed prices and set plans for a big increase in crude production next month.
Brent crude futures, the international benchmark, were 25% lower at US$35.50 a barrel by 1130 GMT, after earlier diving to US$31.02, their lowest since Feb 12, 2016.
The oil price meltdown is compounding the uncertainties over the global and local economies amid the Covid-19 outbreak.
Elsewhere, the ringgit closed 0.9% lower at 4.2130 against the US dollar, from 4.1755 last Friday, and the May crude palm oil futures contract was down RM123 to RM2,328 per tonne.
On Bursa Malaysia, there were 1,139 losers against 120 gainers. All indices were in the red, with the energy index recording the steepest fall of 25.39% to 754.95 points, followed by the industrial products & services index (-10.74%) and technology index (-10.1%).
Turnover was at 6.66 billion shares valued at RM3.63 billion.
Oil and gas (O&G) stocks were the top actives on the local bourse with a handful of them hitting limit down – Dayang Enterprise Holdings, Wah Seong Corp, Carimin Petroleum, Naim Holdings and Petra Energy.
Global equities retreated to a bear market amid a steep sell-off in O&G stocks.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 1,538.38.
The projected upper bound is: 1,462.54.
The projected lower bound is: 1,378.61.
The projected closing price is: 1,420.57.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 black candles.
A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 5 falling windows in the last 50 candles–this makes the current falling window even more bearish. The two candles preceding the falling window were black, which makes this pattern even more bearish.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 40.4022. This is not an overbought or oversold reading. The last signal was a buy 9 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 24.43. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 4 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -202.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 3 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 10 period(s) ago.
Rex Takasugi – TD Profile
FTSE BURSA KLCI closed down -58.940 at 1,424.160. Volume was 115% above average (neutral) and Bollinger Bands were 96% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1,481.81 1,548.67 1,595.25
Volatility: 27 18 12
Volume: 198,102,928 135,767,328 115,332,560
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FTSE BURSA KLCI gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
FTSE BURSA KLCI is currently 10.7% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of .KLSE at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .KLSE and have had this outlook for the last 30 periods. Our momentum oscillator is currently indicating that .KLSE is currently in an oversold condition.