Stocks on Bursa Malaysia extended their gains yesterday for the third consecutive day following positive external developments which lifted sentiments, as regional bourses received a boost after the Bank of Japan made a decision to boost the size of its asset-purchase programme by 10 trillion yen, broadly in line with market projections. The benchmark FBM KLCI advanced 4.96 points or 0.30% higher to 1,670.60 after opening 2.37 points lower at 1,663.27, and hovered between 1,661.21 and 1,670.6 supported by gains seen in the finance counter and banking heavyweights. Gainers led losers by 358 to 273, while 333 counters were unchanged. Volume expanded to 883.819 million shares worth RM1.378 billion from Wednesday's 737.148 million shares valued at RM1.445 billion.
The FBM KLCI opened 2.37 points lower at 1,663.27 and slipped to the intra-day low of 1,661.24 at mid morning. It rebounded to gradually recover its lost ground, and a last minute buying effort on selected blue-chips pushed the key index to close at the highest point of the day. Chart-wise, the FBM KLCI formed a bullish white candlestick which engulf the body of the previous day's candlestick. The price action of the FBM KLCI goes to show that the hidden hand is determine to push the key index higher. Hence, the FBM KLCI is likely to move higher today to re-test the historical high level of 1,679.37.
MACD and its histogram continued to climb higher, indicating a continued increased in the bullish upward momentum. RSI (14) was higher at 73.3, indicating a very bullish short term relative strength and is moving towards the overbought zone of 75. Stochastic was higher at 98.3 from 94.7, indicating a very strong market strength and continuation of the short term up cycle, and is overbought. Readings from the indicators showed that the FBM KLCI is currently very bullish but is getting overbought, and a shallow pullback is likely to happen to neutralize the overbought situation.
The trend of the FBM KLCI is up and bullish as it continue to stay above all the short, medium and long term moving averages. Judging from the price action of the FBM KLCI, the key index is likely to move higher to challenge the historical high level, and a successful breakthrough is likely to see the key index moving higher into the uncharted territory with an immediate target of 1,692, follow by 1,700, 1,703, 1,713 and 1,734.
Overnight, the Dow rebounded +59.75 points or +0.45% to close at 13,311.72. Today, the FBM KLCI is likely to trade within a range of 1,655 to 1,680.
This week's expected range: 1589 – 1695
Today’s expected range: 1655 – 1680
Resistance: 1674, 1677, 1680
Support: 1655, 1658, 1664
Stocks to watch: BENALEC, CBSA, HAIO, PTGTIN, TMCLIFE, YINSON