Stocks on Bursa Malaysia had a field day yesterday despite a downtrend in the regional markets, ending higher on active bargain hunting. The benchmark FBM KLCI ended 5.43 points or 0.34% higher at 1,619.57, after opening at 1,600.09. The barometer index hovered between 1,597.00 and 1,621.06 for the day. Gainers outnumbered losers by 295 to 294, while 314 counters were unchanged. Volume fell to 848.250 million units worth RM1.669 billion from 1.08 billion units worth RM2.012 billion on Wednesday.
Following the big fall on Wednesday, the FBM KLCI opened yesterday with a downside gap of 14.05 points at 1,600.09 and slipped to the intra-day low of 1,597.00 within the first ten minutes after opening. The key index rebounded on buying support and moved higher for the rest of the day with intermittent mild pullback to touch the intra-day high of 1,621.06 before closing off high. Chart-wise, the FBM KLCI formed a bullish white piercing-line candlestick pattern which indicates buying support on bargain-hunting for the key index after a big fall the day before, and the key index is likely to continued its strong upward momentum to climb higher today. Nonetheless, the upward move yesterday is considered as just a technical rebound and strong resistance is expected at 1,625 to 1,634.
MACD continued to slide lower but the histogram contracted upward, indicating a slowdown in the bearish momentum. RSI (14) hooked upward to 33.5 from 29.4, reflecting the rebound, and the key index is still in a bearish state. Stochastic continued to slide lower to 24.7 from 28.4, indicating a weak market strength and continuation of the down cycle. Readings from the indicators showed that the FBM KLCI is still weak and bearish, and the gain yesterday was merely a technical rebound in an oversold market, and more weakness can be expected until a confirm reversal is observed.
The trend of the FBM KLCI is currently down and bearish as the key index has closed below the short, medium and long term moving averages. However, the rebound yesterday managed to bring the FBM KLCI to close above the 240-day SMA after opening below it, and this 240-day SMA is a critical support for the FBM KLCI at the moment as the key index had previously on 28th November rebounded from it and staged a rally which sent the FBM KLCI to a new historical high of 1,699.68. For now, whether the rebound yesterday can lead into a rally and trend reversal will depends on whether the FBM KLCI is able to move above the 1,648-point level, otherwise, this may turn out to be just a dead-cat-bounce with more downside to come.
Overnight, the Dow fell 42.47 points or -0.30% to close at 13,944.05. Today, the FBM KLCI is likely to trade within a range of 1,579 to 1,645.
This week's expected range: 1578 – 1679
Today’s expected range: 1579 – 1645
Resistance: 1628, 1637, 1645
Support: 1579, 1588, 1604