Stocks on Bursa Malaysia closed mostly higher yesterday, driven by gains in selected heavyweights as the market recouped some of its earlier losses. Despite the lingering European debt crisis, stimulus initiatives undertaken by central banks of major economies gave hope for a market rebound in global markets. The FBM KLCI closed 6.20 points or 0.38% higher at 1,618.58 after hitting an intra-day low of 1,603.09. Gainers beat losers by 331 to 329 while 342 counters were unchanged. Turnover surged to 989.375 million shares worth RM1.471 billion from 827.15 million shares worth RM1.351 billion registered on Monday.
The FBM KLCI opened 0.56 of a point lower at 1,611.82 and slipped to the intra-day low of 1,603.09 within the first thirty minutes of trading, losing 9.29 points at its worst. The key index then rebounded and moved higher with intermittent pullback for the rest of the day to touch the intra-day high of 1,620.98 before closing off high. Chart-wise, the FBM KLCI formed a bullish white hammer candlestick which indicates the fight back of the bulls after being beaten down over the last few trading sessions, and the key index is likely to continue its rebound to move higher. Immediate strong overhead resistance zone is at 1,621 to 1,625 follow by 1,630, while the immediate downside support zone is at 1,611 to 1,603.
MACD continued to slip lower and so is the histogram, however, the histogram extended marginally downward, indicating a reduction in the bearish momentum. RSI (14) hooked upward to 42.5 from 38.6, reflecting the rebound, and is back to the mildly bearish zone. Stochastic was marginally lower at 35.9 from 37.6, indicating a reduction in the downward momentum but the short term down cycle is still intact. Readings from the indicators showed that the FBM KLCI is undergoing a technical rebound but is still overall bearish, and hence might continue to consolidate with a downward bias.
Despite a strong rebound yesterday, the short and medium term trend of the FBM KLCI remained down as the key index is still staying below the cluster of short and medium term moving averages. In order to reversed the downtrend, the FBM KLCI must at least climb above the 1,640-point level, the upper resistance trend line of the downtrend channel, which is not an easy task at the moment. The long term uptrend is still intact but is likely to subject to challenge soon as the key index is now sitting just above the lower supporting trend line of the longer term uptrend channel, and a close below 1,610-point will spell an end to the wave-5 uptrend which started on 27th September 2011, and a major correction will take place.
Overnight, the Dow fell -101.37 points or -0.75% to close at 13,457.55. Today, the FBM KLCI is likely to trade within a range of 1,589 to 1,639.
This week's expected range: 1578 – 1685
Today’s expected range: 1589 – 1639
Resistance: 1625, 1632, 1639
Support: 1589, 1596, 1607