Stocks on Bursa Malaysia were marginally higher at close yesterday, assisted by gains mostly seen in selected heavyweights, as investors remained on the sidelines as they awaited positive news from meetings of the US and European central banks later yesterday and today respectively, with regard to further possible stimulus measures. The FBM KLCI was 0.87 of a point higher at 1,632.47, after moving between 1,626.68 and 1,635.33, throughout the day. Gainers led losers by 383 to 375 while 336 counters closed unchanged. Total volume rose to 1.354 billion shares worth RM1.864 billion from Tuesday’s close of 1.175 billion shares valued at RM1.868 billion.
The FBM KLCI opened 3.53 points lower at 1,628.07, on cue of a weak performance on Wall Street overnight, and slipped to the intra-day low of 1,626.28 within the first five minutes of trading on panic selling. However, the key index rebounded quickly and climbed to the intra-day high of 1,635.33 and moved range-bound for the rest of the day. Chart-wise, the FBM KLCI formed a white piercing-line candlestick which indicates a fight back by the bulls after the initial sell down by the bears. From the price action, it is likely that the FBM KLCI will continue to move in a sideways range-bound mode today.
MACD was marginally lower, but the histogram was slightly shorter upward for the third bar, indicating a reduction in the downward momentum. RSI (14) was almost flat at 59.2, reflecting the marginal gain on the key index, and is still in the mildly bullish zone. Stochastic was higher at 41.9 and has crossed above the slow stochastic line, indicating an improvement in the short term market strength and possible change in the market cycle from down to up. Readings from the indicators showed that the FBM KLCI is currently in a consolidation mode, and is likely to stay this way until a breakout is observed in either direction.
The short term trend of the FBM KLCI has turned sideways, while the medium to longer term uptrend still remained intact. Immediate overhead resistance zone is at 1,635 to 1,640 while the downside support zone is at 1,626 to 1,620. A break above 1,640-point will see the FBM KLCI moving higher to re-test the recent high; Judging from the waves formed, a wave-C is likely to unfold soon, and a break below the 1,620-point level will likely see the key index plunging to the lower target levels of 1,608, 1,601 and 1,591.
Overnight, the Dow fell -37.62 points or -0.29% to close at 12,971.06. Today, the FBM KLCI is likely to trade within a range 1,619 to 1,644.
This week's expected range: 1593 – 1666
Today’s expected range: 1619 – 1644
Resistance: 1636, 1640, 1644
Support: 1619, 1622, 1627
Stocks to watch: WEIDA, NAIM, HINGYAP, N2N, BAHVEST