Stocks on Bursa Malaysia ended firmer yesterday, in line with regional bourses, driven by continuous gains mostly seen in selected heavyweights. The local market started the day on a positive note as investors took the cue from the powerful surge on Wall Street last Friday and the positive vibes spilled onto regional bourses. The FBM KLCI finished 7.41 points higher at 1,632.35 after hovering between 1,623.26 and 1,632.35 throughout the day. Gainers outpaced losers by 426 to 305 while 334 counters closed unchanged. Total volume appreciated to 1.229 billion shares, valued at RM1.285 billion, from 978.76 million shares, valued at RM1.71 billion, recorded on Friday.
Taking cue from the strong performance of Wall Street last Friday, the FBM KLCI opened 1.92 points higher at 1,626.86 and surged to the morning session high of 1,628.99, the key index pulled back on profit-taking activity to the intra-day low of 1,623.26 and moved in a tight range for a major part of the day before late hour buying of selected blue-chips pushed it to close at the day’s high. Chart-wise, the FBM KLCI formed a white hammer-like candlestick which indicates buyers were stronger than sellers and the key index has reversed up. The appearance of this candlestick also served to confirm that a temporary bottom has formed at 1,620.76 on last Friday, and is poised to move higher. Immediate strong overhead resistance zone is expected at 1,639 to 1,642, if only the FBM KLCI is able to breakthrough this resistance zone, then the downtrend is considered over, otherwise, it’s just a technical rebound.
MACD was marginally lower, while the histogram has turned shorter upward, indicating a reduction in the downward momentum. RSI (14) was higher at 59.3, reflecting the rebound and an improvement in the short term relative strength to a stronger mildly bullish state. Stochastic, nevertheless, continued to slide lower to 27.2, indicating the short term down cycle is still in action and is not over yet. Mixed signals from the indicators showed that the FBM KLCI is still in a consolidation state, but signs are there that the downward momentum is reducing, and the benchmark index is likely to stay range-bound until solid signals of breakout is observed.
The short term trend of the FBM KLCI has turned sideways range-bound as the key index is now below the 10-day SMA but is closing above the 5 and 20-day SMA. A breakout above the 10-day SMA at 1,636 would see the FBM KLCI reversing the short term downtrend, but it still have to clear the hurdle at 1,639 in order to resume its uptrend, otherwise, it may just stay range-bound. Nonetheless, the medium and longer term uptrend still remained intact. With volume remained lukewarm in the one billion shares level and a low average value per unit transacted, the broad market is likely to be dominated by rotational play on the second and third liners.
Overnight, the Dow fell -2.65 points or -0.02% to close at 13,073.01. Today, the FBM KLCI is likely to trade within a range 1,617 to 1,642.
This week's expected range: 1593 – 1666
Today’s expected range: 1617 – 1642
Resistance: 1636, 1639, 1642
Support: 1617, 1620, 1626
Stocks to watch: SKPETRO, GTRONIC, THHEAVY, SCOPE, OGAWA