Stocks on Bursa Malaysia closed broadly higher yesterday as investors took the cue from gains on Wall Street amid the positive external environment. Most global bourses posted an uptrend yesterday following reports that Cyprus and its international lenders had agreed on a bailout deal which lifted investors’ risk appetite. The FBM KLCI closed 17 points or 1.04% higher at 1,643.89, after hovering between 1,628.54 and 1,644.59 throughout the day, with gains mostly seen in key heavyweights and blue-chips. Gainers led losers 304 to 309 while 312 counters were unchanged. Volume was thin with 708.602 million shares traded, valued at RM1.465 billion, versus last Friday’s 1.025 million shares worth RM1.741 billion.
Taking cue from gains on Wall Street overnight, the FBM KLCI opened 3.77 points higher at 1,630.66 and dipped to the intra-day low of 1,628.54 within the first 10 minutes, and the key index rebounded strongly and moved higher for the rest of the day to hit the intra-day high of 1,644.59 at mid afternoon before pulling back to close off high. Chart-wise, the FBM KLCI formed a bullish long white candlestick which indicates the bulls were in control for the day and staged a strong reversal after two days of pulling back on profit-taking activity. With the strong upward momentum yesterday, the FBM KLCI is likely to continue to move higher today. Immediate overhead resistance zone is at 1,645 to 1,665 with the psychological resistance barrier at 1,650. Downside support zone is expected at 1,634 to 1,624.
MACD hooked upward but is still below the signal-line, and the histogram also contracted upward, indicating a reversal in the momentum. RSI (14) swing upward to 54.6 from 43.1, indicating a change in the short term relative strength from mildly bearish to mildly bullish. Stochastic was higher at 39.5 from 31.3, indicating an improvement in the market strength and continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI is staging a reversal and is turning mildly bullish.
With the strong up swing yesterday, the short term trend of the FBM KLCI has turned up as the key index is now closing above the 5, 10, 20 and 30-day SMA. Nevertheless, the medium term trend is sideways while the long term trend is still up. Immediate strong overhead resistance is expected at 1,645 to 1,648 posted by the 120 and 60-day SMA. As of now, the FBM KLCI is likely to remain in sideways range-bound mode within a range of 1,613 to 1,665.
Overnight, the Dow fell 64.28 points or -0.44% to close at 14,447.75. Today, the FBM KLCI is likely to trade within a range of 1,617 to 1,660.
This week's expected range: 1595 – 1655
Today’s expected range: 1617 – 1660
Resistance: 1649, 1655, 1660
Support: 1617, 1622, 1633
Stocks to watch: ALAM, IJM, PERISAI, TDM, YINSON