Selling may resume today following the plunge in global equity indices last night but it can only be confirmed by a close below 1,475 pts. Support is expected at 1,430 pts, which the index has to break to keep the longer-term trend weakness intact. After registering a rally high on Monday, sentiment turned weak as the index formed a “Black Candle” yesterday, closing just above Monday’s low. Note too that the sentiment is weak, shown by the wide discount of the FBM KLCI Futures. Support is expected at the gaps created on 27 Oct and 24 Oct, around 1,460 and 1,448 pts respectively, followed by a stronger one at the real low of two weeks ago – 1,430 pts. A resumption of selling can only be confirmed once the index closes below the 3-day low of 1,475 pts. This is increasingly likely following the tumble in the US and European equity indices last night. Holding above the 1430-pt support level could be positive for the rally since 26 Sept, as this should keep the index above the 50-day MAV line. However, a violation of 1,430 pts will likely see the index testing the 1,400-pt psychological level.
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