Stocks on Bursa Malaysia closed higher yesterday driven by gains in selected heavyweights on JP Morgan’s ‘overweight’ rating on Malaysian equities. JP Morgan gave the rating despite the decline in share prices on major regional markets due to concerns over risks in the Cyprus financial bailout by the International Monetary Fund and European Union. The FBM KLCI rose 8.94 points or 0.54% to end at 1,652.83, the highest since March 13, 2013, after it touched an intra-day high of 1,660.80. Advancers led decliners by 380 to 286 with 322 counters were unchanged. Turnover increased to 822.262 million shares worth RM1.948 billion from Monday's 708.602 million shares worth RM1.465 billion.
The FBM KLCI opened with an upside gap of 7.95 points at 1,651.84 and pulled back to the intra-day low of 1,648.54 within the first fifteen minutes. It rebounded and surged to the intra-day high of 1,660.80 at mid morning before pulling back on profit-taking activity and moved sideways range-bound for the rest of the day till closing. Chart-wise, the FBM KLCI formed a white inverted hammer-like candlestick with a longer upper shadow which indicates selling pressure on profit-taking on the index-link counters when the key index approached the 1,660 level. Hence, the FBM KLCI is likely to pause for consolidation at current level and might close the gap before re-testing the immediate overhead resistance zone of 1,660 to 1,664. Immediate downside support zone is at 1,648 to 1,644.
MACD was higher and made a golden-cross over its signal-line, it also goes above the zero-line at the same time, issuing a buy signal, and indicated that the FBM KLCI has again turned bullish. RSI (14) was higher at 59.3 from 54.6, indicating an improvement in the short term relative strength and the key index is turning bullish for the short term. Stochastic was higher at 54 from 39.5, indicating an increased in the market strength and continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI gradually turning bullish, and is likely to extend its short term uptrend.
The short term trend of the FBM KLCI has turned up as the key index is now closing above all the moving averages. However, the medium term trend is still remains sideways as the medium term moving averages has turned flat, and the long term trend is still up. From a medium term perspective, the FBM KLCI is still sideways range-bound within a range of 1,699 to 1,597, and for the immediate short term, the range is 1,664 to 1,613. Until the FBM KLCI is able to breakout from the immediate overhead resistance at 1,664, it is likely to stay range-bound within the short term range. Total volume turnover remained weak indicating a lack of interest and participation as most investors are still on the sideline awaiting the dissolution of the parliament for the general election.
Overnight, the Dow rebounded 111.90 points or +0.77% to close at 14,559.65. Today, the FBM KLCI is likely to trade within a range of 1,635 to 1,673.
This week's expected range: 1595 – 1655
Today’s expected range: 1635 – 1673
Resistance: 1659, 1666, 1673
Support: 1635, 1641, 1647
Stocks to watch: CCM, MUHIBAH, SCOMI, TEBRAU, ZELAN