Stocks on Bursa Malaysia closed higher yesterday, aided by strong buying interest in line with gains in most regional markets. Stocks were supported by the European Central Bank’s announcement that it would not tighten monetary policy any time soon as it was concerned over investors in the Euro zone. The announcement came after US Federal Reserve chairman Ben Bernanke said the central bank’s own huge monetary easing would stay in place. The FBM KLCI rose 13.49 points or 0.83% to close at 1,637.63 after hovering between 1,624.79 and 1,637.63 throughout the day, amid market’s cautiousness about the general election. Advancers led decliners by 394 to 283, with 300 counters unchanged. Total volume rose to 1.01 billion shares worth RM1.98 billion from 895.99 million shares worth RM1.55 billion yesterday.
Taking cue from the strong performance of the Dow overnight, the FBM KLCI opened 1.23 points higher at 1,625.37 and moved higher gradually in a range-bound manner with resistance seen at 1,628-point level amid cautious trading. A breakout of the resistance at 1,628 in the afternoon session triggered a rally which pushed the key index to close at the highest point of the day. Chart-wise, the FBM KLCI formed a bullish white candlestick which indicates the bulls were in control. The upward move has broken the resistance of 1,635-point registered on February 14, and is likely to see further up move of the FBM KLCI to test the next immediate resistance zone at 1,640 to 1,646.
MACD and its histogram continued to climb higher, indicating an increased in the upward momentum. RSI (14) was higher at 52.9 from 43, it has for the first time breaking above the 50-level after breaking below the level on January 21, indicating the FBM KLCI has turned mildly bullish in the short term. Stochastic was higher at 79.3 from 69.6, indicating a further improvement in the market strength and continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI is gradually turning bullish for the short term and is likely to continue its upward momentum to move higher.
With the strong upward move yesterday, the short term trend of the FBM KLCI has turned up as the key index has closed above the short term 5, 10 and 20-day SMA, and is closing just right below the 30-day SMA which is currently at 1,637.90, a break of the 30-day SMA will likely trigger further rally of the key index to test the immediate overhead resistance zone at 1,640 to 1,651 formed by a cluster of medium term moving averages. If the FBM KLCI is able to close above the 1,651-point level, the downtrend would be considered over, otherwise, it may continue to move within the current sideways range of 1,600 to 1,650.
Overnight, the Dow fell 20.88 points or -0.15% to close at 14,054.49. Today, the FBM KLCI is likely to trade within a range of 1,616 to 1,650.
This week's expected range: 1574 – 1660
Today’s expected range: 1616 – 1650
Resistance: 1642, 1646, 1650
Support: 1616, 1620, 1629