Stocks on Bursa Malaysia ended sharply higher yesterday in line with the firmer regional stock markets, buoyed by the stronger Wall Street overnight. Regional markets’ sentiment received a boost following the biggest gains on Wall Street in four years after a US Federal Reserve policymaker said the case for an interest rate increase next month seems less compelling than it was a few weeks ago. The FBM KLCI rose 21.33 points or 1.35% to 1,601.7, after moving between 1,579.98 and 1,601.7 throughout the day. Gainers more than tripled losers by 726 to 206, while 222 counters remained unchanged. Total volume declined to 2.1 billion units valued at RM2.31 billion from Wednesday’s 2.15 billion units valued at RM2.27 billion.
Taking cue from the strong performance on Wall Street overnight which saw the Dow rising 619 points, the FBM KLCI opened 2.38 points higher with an upside gap at 1,582.75 but slipped lower to hit the intra-day low of 1,579.98 briefly after opening. The key index rebounded from the low and rallied higher for the rest of the day, with intermittent mild pullback correction, to close at the highest level of the day. Chart-wise, the FBM KLCI formed a bullish white candlestick which continued the uptrend from the previous day and indicated the bulls were in control for the day, and formed a V-shape recovery. Hence, the FBM KLCI is likely to continue with its upward momentum to rise further. Immediate overhead resistance zone is at 1,603 to 1,629, while the downside support zone is at 1,595 to 1,579.
MACD rose further, but is still below the signal-line, and its histogram also contracted upward strongly, indicating a strong increase in the bullish upward momentum. RSI (14) was higher at 42.6 from 36.5, indicating further reduction in the bearish momentum and the key index is at a mildly bearish state compared with the bearish state before. Stochastic was higher at 40.6 from 22.5, indicating further strengthening of the FBM KLCI and a continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI is turning less bearish as the bullish momentum gradually increases, and hence, the FBM KLCI is likely to continue with its upward momentum to move higher today.
The general trend of the FBM KLCI is still down. However, with the bullish strong move over the last three days, the immediate short or near term trend of the FBM KLCI has turned up as the key index has closed above the 5, 10, and 15-day simple moving averages (SMA), indicating a near term trend change from down to up. On top of that, the key index also formed a V-bottom reversal which saw an almost hundred point gains in three days, indicating a temporary bottom was seen at 1,503.68 on Tuesday. Based on Elliott wave and Fibonacci study, the rebound at 1,503-point had significant meaning in that the level is the 1.618 Fibonacci projection target for the major A-B-C corrective wave starting from 1,896.23 to the pivot low of 1,671.82 and to the pivot high of 1,867.53, signifying the bearish impulse wave-3 of the bigger wave-C have temporary ended at the 1,503-point level, and now, the FBM KLCI is staging a wave-4 correction with an immediate upside target of 1,623, the 50% Fibonacci retracement level for the wave-3 starting from 1,744-point to 1,503-point. Nonetheless, the FBM KLCI is not totally out of the bearish downtrend yet, as the bullish upward move is seen as a just a technical rebound in a much oversold market. To reverse the bearish downtrend, the FBM KLCI must at least move back to above the neckline of the Head-and-Shoulder pattern at 1,671-point, and preferably above 1,744-point. As for today, the FBM KLCI may see some pullback on profit taking activity ahead of the long weekend as the week and month is coming to a close.
Overnight, the Dow rose 369.26 points or 2.27% to close at 16,654.77. Today, the FBMKLCI is likely to trade within a range of 1,565 to 1,623.
This week's expected range: 1518 – 1632
Today’s expected range: 1565 – 1623
Resistance: 1608, 1616, 1623
Support: 1565, 1572, 1587
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