Stocks on Bursa Malaysia closed slightly higher yesterday, as prices continued to recover after the recent oversold conditions. The market's performance was in tandem with the regional trend, boosted by positive news that the US political leaders were closing in on a budget deal to avoid a so-called "fiscal cliff". Buying interest in banking, telecommunication and oil and gas counters continued to lift the local market amid bullish external sentiments. The FBM KLCI was up 0.8 point or 0.05% to 1,607.32, after opening two points higher at 1,608.52 and moved between 1,607.9 and 1,612.73. Losers led gainers by 354 to 327, while 334 counters were unchanged. Volume fell to 885.74 million shares worth RM1.53 billion from Wednesday's 1.2 billion shares worth RM1.93 billion.
Taking cue from a strong performance of the Wall Street overnight, the FBM KLCI continued its rebound by opening two point higher at 1,608.52, and surged to the intra-day high of 1,612.73 within the first ten minutes after opening. The key index pulled back on profit-taking to hit the intra-day low of 1,607.09 and rebounded to move sideways for the rest of the day. Chart-wise, the FBM KLCI formed a bearish black inverted hammer candlestick, a top reversal candlestick pattern which indicates heavy profit-taking activity where the bulls were initially dominant in pushing the index up but were later being beaten down by the bears to register only a small gain. Hence, the key index is likely to consolidate today with an immediate downside support at 1,606 provided by the 5-day SMA and an overhead resistance at 1,612.
MACD continued to slip lower but was tapering off, while its histogram contracted upward for a second bar, indicating a reduction in the bearish downward momentum. RSI (14) was higher at 29 from 28.1, indicating a slight improvement in the short term relative strength but the key index is still in the very bearish zone. Stochastic was higher at 19.9 from 10.5, indicating a pickup in the short term market strength and possible continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI is undergoing a technical rebound after being oversold, and whether the rebound can continue to lift the index higher will depends on the follow through buying momentum.
The FBM KLCI rebounded over the last two days after hitting the 240-day SMA support on Wednesday. However, the trend is still down as the key index is still closing below most of the moving averages. The only short term positive sign is that the FBM KLCI has closed above the immediate short term 5-day SMA, while the 10-day SMA is still pointing southward above it. In order to reverse the current downtrend, the FBM KLCI will have to move above the 30-day SMA which is currently at 1,643-point level.
Overnight, the Dow rose 36.71 points or +0.28% to close at 13,021.82. Today, the FBM KLCI is likely to trade within a range of 1,599 to 1,618.
This week's expected range: 1590 – 1645
Today’s expected range: 1599 – 1618
Resistance: 1611, 1615, 1618
Support: 1599, 1603, 1605