It was a blood bath for the local bourse. At mid-day, the FBM KLCI was down 38.17 points at 1,638.27 with all 30 index components in negative territory. Speculation on the impending general elections had also triggered a broad market selloff that saw losers outnumbering gainers by 596 to 38, and just 110 counters which traded unchanged.
From a technical perspective, the FBM KLCI formed a bearish “Black Marubozu” candlestick, which indicates no let up in selling pressure during the morning session. The sharp sell-off had resulted in the benchmark index violating multiple support levels, including the 23.6% (1,674), 38.2% (1,659) and 50%(1,643) Fibonacci Retracement levels, as well as the crucial 50- and 100-day SMAs at 1,648/50. Even so, the RSI has yet to enter into oversold regions, and we suspect the downwards move has yet to come full cycle. We expect further selling pressure ahead, and with the next support levels a fair distance southwards at 1,624 and 1,590, perhaps it would be a good idea to unload into strength from here.
Source: Kenanga
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