Stocks on Bursa Malaysia maintained its steady trend to close higher yesterday, spurred by buying interest in selected blue-chip counters on year-end window-dressing activity and steadier regional markets. The benchmark FBM KLCI ended 8.18 points or 0.5% higher at 1,649.75, lifted by gains in key finance stocks. The index moved between 1,643.51 and 1,650.85 throughout the day after opening 2.58 points higher at 1,644.15. Gainers led losers 356 to 290 while 317 counters were unchanged. Volume rose to 950.47 million shares, worth RM1.77 billion, from Tuesday's 899.63 million shares, worth RM1.6 billion.
Spurred by the strong performance of Wall Street overnight, the FBM KLCI opened with an upside runaway gap of 2.58 points at 1,644.15 and surged higher to the intra-day high of 1,650.85 within the first fifteen minutes of trading. The key index then pulled back on profit-taking to consolidate itself for most part of the day, but rebounded to close near the day's high on some late hour buying of selected blue-chips. Chart-wise, the FBM KLCI formed a bullish white candlestick which indicates the bulls or buyers were in control for the day in pushing the index to close near the day's high, and the key index may continue its upward trend if the buying interest continues. However, as the benchmark index has run up consecutively for the last six sessions and is near the psychological barrier of 1,650-point, some strong profit-taking could be expected.
MACD and its histogram continued to climb higher, indicating a continued improvement in the upward momentum. However, MACD is still below the zero-line, indicating the present up move could be just a technical rebound in a bear market if it fails to move above the zero-line and reversed. RSI (14) was higher at 65.9 from 61.5, indicating the short term relative strength of the key index is getting more bullish. Stochastic was higher at 98.8, indicating a very strong market strength and continuation of the up cycle, but is now deep into the short term overbought zone. Readings from the indicators showed that the FBM KLCI is turning more bullish, but is short term overbought, and hence, a pullback correction on profit-taking might be expected.
The trend of the FBM KLCI has reversed up and turned bullish as the key index is now closing above all the short, medium and long term moving averages. Nevertheless, the benchmark index might pullback to consolidate itself after running up consecutively for six sessions, and the immediate strong overhead resistance zone is expected at 1,655 to 1,660 while the downside support zone is at 1,643 to 1,630.
Overnight, the Dow fell 2.99 points or -0.02% to close at 13,245.45. Today, the FBM KLCI is likely to trade within a range of 1,637 to 1,658.
This week's expected range: 1587 – 1638
Today’s expected range: 1637 – 1658
Resistance: 1653, 1655, 1658
Support: 1637, 1640, 1645
Stocks to watch: CBSA, DIGI, INCKEN, P&O, THHEAVY