Stocks on Bursa Malaysia closed higher for the third consecutive day yesterday on continued buying interest, spurred by better performance of regional markets and year end window-dressing activity. The benchmark FBM KLCI rose 9.24 points or 0.58% to close at 1,641.57, lifted by gains in plantation stocks. The index moved between 1,633.82 and 1,642.23 after opening 1.67 points higher at 1,633.82. Gainers led losers by 370 to 281 while 331 counters were unchanged. Volume rose to 899.63 million shares worth RM1.6 billion from the 812.07 million shares worth RM1.37 billion on Monday.
The FBM KLCI opened 1.67 points higher at 1,633.82, the intra-day low, and surged to the intra-day high of 1,642.23 within the first twenty minutes after opening. The key index pulled back on mild profit-taking and moved sideways for the rest of the day within a tight range before a last minute buying which push it to close near the day's high. Chart-wise, the FBM KLCI formed a bullish long white candlestick which indicates the bulls or buyers were in full control for the day, and the key index is likely to moved higher on follow through buying momentum. Immediate overhead resistance is expected at 1,645, the 61.8% Fibonacci retracement level, and the psychological resistance level of 1,650.
MACD and its histogram continued to climb higher, indicating continued improvement in the bullish momentum of the key index. Nonetheless, as MACD is still below the zero-line, the present up move could turn out to be just a technical rebound in a bear market. RSI (14) was higher at 61.6 from 55.6, indicating the short term relative strength of the key index has turned bullish for the first time after falling below the 50-level on 2nd November. Stochastic was higher at 91.4 from 80.6, indicating a very strong market strength and continuation of the short term up cycle. Nevertheless, the stochastic reading has entered the short term overbought zone, and hence, a pullback on profit-taking might be expected ahead. Readings from the indicators showed that the FBM KLCI has turned bullish, and the upward momentum is likely to send the index higher with possibility of a pullback correction.
The trend of the FBM KLCI has reversed as the key index has closed above the 30 and 120-day SMA, and is just marginally below the 50-day SMA which is currently at 1,642.20. A further break of the 50-day SMA will likely spur the FBM KLCI to move higher to test the psychological resistance level of 1,650. Nevertheless, as the FBM KLCI has run up continuously over the last five trading sessions, a pullback on profit-taking can be expected.
Overnight, the Dow rose 78.56 points or +0.60% to close at 13,248.44. Today, the FBM KLCI is likely to trade within a range of 1,627 to 1,651
This week's expected range: 1587 – 1638
Today’s expected range: 1627 – 1651
Resistance: 1645, 1648, 1651
Support: 1627, 1630, 1636
Stocks to watch: BENALEC, MISC, PERDANA, PERISAI, SKPETRO, YINSON, YTL