Stocks on Bursa Malaysia closed higher yesterday in tandem with the advances in Asian markets driven by expectations of more measures by policymakers in China to boost flagging growth in the world’s second largest economy. The FBM KLCI gained 8.54 points or 0.53% to 1,627.84 after opening 1.8 points higher at 1,621.10, fuelled by buying in selected heavyweights. Gainers led losers by 363 to 303, with 322 counters unchanged. Turnover decreased to 731.340 million shares worth RM1.384 billion from 889.356 million shares worth RM1.448 billion on Wednesday.
The FBM KLCI opened 1.8 points higher at 1,621.10 and moved higher for the rest of the day, it touched an intra-day high of 1,631.67 at mid afternoon before profit-taking activity sent it lower to close off high. Chart-wise, the FBM KLCI formed a bullish white candlestick which breaks away from the consolidation zone to move higher. With this strong up move, the key index is likely to move higher today with immediate strong overhead resistance zone anticipated at 1,631 to 1,640, while the immediate downside support zone is at 1,620 to 1,611.
MACD has hooked upward and its histogram also further contracted, indicating a pickup in the upward momentum. However, as MACD is still below both the signal-line and zero-line, the current up move may be viewed as just a technical rebound in a bigger downtrend. RSI (14) was higher at 48.3 from 42.9, indicating a further improvement of the FBM KLCI's short term relative strength which is now near neutral compared with the mildly bearish state before. Stochastic has turned upward to 46.1 and crossed above the slow stochastic line, flashing out a first sign that the short term down cycle has ended, and the beginning of an up cycle. Readings from the indicators showed that the FBM KLCI is gradually shrugging off its bearishness.
Despite the up move over the last three days, the FBM KLCI is still basically trapped within a bigger downtrend which started on 5th September. However, the positive sign is that the KLCI has moved above the middle downtrend line of the downtrend channel, and also closing above the 5-day SMA, indicating a short term up swing. Nevertheless, the FBM KLCI has to close above upper resistance trend line of the downtrend channel or 1,640-point level in order for it to reverse the current downtrend.
Overnight, the Dow rose 72.46 points or +0.54% to close at 13,485.97. Today, the FBM KLCI is likely to trade within a range of 1,610 to 1,642.
This week's expected range: 1578 – 1685
Today’s expected range: 1610 – 1643
Resistance: 1633, 1638, 1643
Support: 1610, 1615, 1621
Stocks to watch: GWPLAST, MINHO, PERDANA