Stocks on Bursa Malaysia ended on mixed note yesterday in cautious trading in tandem with its regional peers. Ahead of the year-end window-dressing, investors focused on defensive stocks like Nestle and British American Tobacco (BAT), which were among the top gainers. However, losses in plantation counters due to the poor outlook on the rubber and crude palm oil sectors for next year, had mitigated the market’s gains. The FBM KLCI rose 2.44 points or 0.15% to close at 1,616.23 after opening at 1,614.71, and moved between 1,614.71 and 1,620.05. Losers led gainers by 365 to 282, while 341 counters were unchanged. Volume rose to 881.16 million shares worth RM1.25 billion from Wednesday's 829.13 million shares worth RM1.19 billion.
Taking cue from the positive performance on Wall Street overnight, the FBM KLCI opened with an up gap of 0.92 point at 1,614.71, the day's low, and surged higher to the intra-day high of 1,620.05 within the first twenty minutes after opening, and the key index pulled back on profit-taking to moved sideways within a tight range for the rest of the day. Chart-wise, the FBM KLCI formed a white inverted hammer candlestick, a potential reversal candle pattern, which indicates sellers were slightly dominant over the buyers and has pressed the index to close below the mid range of the day, and hence, the FBM KLCI is likely to consolidate itself today. Immediate overhead resistance is at 1,620 while the immediate downside support is at 1,614.
MACD continued to climb higher and has made a golden-cross over the signal-line, issuing a buy signal on the daily chart after a five-week corrections. RSI (14) was higher at 41.3 from 38.7, indicating a further improvement in the short term relative strength to become less bearish as the key index turned mildly bearish from the bearish zone. Stochastic was higher at 50.4, crossing the 14-days mid range, indicating a continued improvement in the market strength and continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI is gradually turning less bearish and is likely to continue to improve.
The immediate short term trend of the FBM KLCI has turned up, as the key index has closed above the immediate short term 5 and 10-day SMA, moreover, the 5-day SMA has also made a golden-cross over the 10-day SMA, signalling a short term uptrend. Nevertheless, the medium term trend is still down as the FBM KLCI is still below the 30, 60 and 120-day SMA. In order to reverse the downtrend, the FBM KLCI will have to close above the 50-day SMA, the highest among the medium term SMA, which is currently at 1,641-point level. As the weekend is approaching, the market is likely to trade more cautiously.
Overnight, the Dow rose 39.55 points or +0.30% to close at 13,074.04. Today, the FBM KLCI is likely to trade within a range of 1,608 to 1,625.
This week's expected range: 1570 – 1641
Today’s expected range: 1608 – 1625
Resistance: 1619, 1622, 1625
Support: 1608, 1611, 1614