Stocks on Bursa Malaysia staged a late rally yesterday which pushed the FBM KLCI to almost break the all-time high of 1,679.37 recorded end-October. Other regional bourses also closed on a firm note. The benchmark index, which hit 1,679.23 at 3.09 pm, retreated and closed 2.58 points or 0.15% higher at 1,674.16 after opening 1.74 points higher at 1,673.32, has been hovering above 1,670 since trading opened. Gainers thumped losers by 396 to 278 while 323 counters were unchanged. Total volume surged to 847.551 million shares worth RM1.16 billion from 598.845 million shares worth RM703.926 million on Wednesday.
The FBM KLCI opened 1.74 points higher at 1,673.32 and moved in a tight range, it hit an intra-day low of 1,671.82 at mid morning but rebounded to gradually climb higher. The benchmark index staged a rally in the afternoon session to hit an intra-day high of 1,679.23, which was just 0.14 of a point below the all-time-high of 1,679.37, but retreated to close off high on heavy profit-taking. Chart-wise, the FBM KLCI formed a white inverted hammer or shooting-star like candlestick, a top reversal candlestick pattern, which indicates toppishness and distribution when appeared at a high level, and the key index is likely to take a breather or pullback to consolidate itself. Immediate overhead resistance is at 1,679.37 while the downside support is at 1,665.
MACD continued to climb higher, but its histogram further contracted, indicating the upward momentum is reducing in speed and weakness is developing. RSI (14) was higher at 69.1 from 68 previously, indicating a mild improvement in the index's short term relative strength. Stochastic was higher at 93.1, has hooked up and crossed above the slow stochastic line, indicating a pickup in the market strength and continuation of the up cycle. Readings from the indicators showed that the FBM KLCI is in a bullish state, however, the MACD histogram gave some early indication that the upward momentum is reducing, and weakness could be developing.
The trend of the FBM KLCI is up and bullish as the key index is staying above all the short, medium and long term moving averages. However, the candlestick formation yesterday showed that heavy profit-taking activity at this high level is likely to cap gain, and the FBM KLCI may consolidate before breaking into the uncharted territory above the all-time-high of 1,679.37. Volume has picked up slightly but still below the one billion shares mark, indicating the returned of retail trading interest.
Overnight, the Dow fell 18.28 points or -0.14% to close at 13,096.31. Today, the FBM KLCI is likely to trade within a range of 1,663 to 1,686.
This week's expected range: 1618 – 1697
Today’s expected range: 1663 – 1686
Resistance: 1678, 1682, 1686
Support: 1663, 1667, 1670