Stocks on Bursa Malaysia ended on a positive note yesterday after recent losses on renewed buying interest from bargain hunters, and most of the regional bourses had also recovered, despite weak US manufacturing data in May, the lowest since June 2009, as this had eased the concerns of an early cut in the Federal Reserve (Fed) stimulus. The FBM KLCI ended yesterday at an intra-day high of 1,776.74, up 10.41 points or 0.59%, after moving between 1,776.74 and 1,767.2 throughout the day. Gainers led losers by 495 to 378, with 248 counters unchanged. Volume declined to 2.1 billion units valued at RM2.21 billion from Monday's 2.31 billion units valued at RM2.36 billion.
Taking cue from the rebound on Wall Street overnight, the FBM KLCI opened 2.45 points higher at 1,768.78 and moved higher. It slipped to the intra-day low of 1,767.20 briefly on profit-taking, but rebounded to move higher gradually with mild intermittent profit-taking to close at the highest point of the day. Chart-wise, the FBM KLCI formed a bullish white candlestick which indicates the bulls or buyers were in control for the day, and hence, the key index is likely to continue its upward momentum to move higher today. Immediate overhead resistance zone is at 1,780 to 1,786, while the downside support is at 1,765.
MACD continued to slide lower, but the histogram contracted upward, indicating a reduction in the downward or bearish momentum. RSI (14) hooked upward to 58.9 from 54.8, reflecting a mild rebound, and the short term relative strength is still in the mildly bullish zone. Stochastic, however, continue to slide lower to 18.9, indicating a continuation of the weakness and the short term down cycle is still intact. Mixed signals from the indicators showed that the FBM KLCI is still in a consolidation mode. Nonetheless, the stochastic reading showed that key index is short term oversold, and a rebound is imminent.
The medium to longer term uptrend of the FBM KLCI remained intact. However, the short term trend of the FBM KLCI has turned sideways range-bound. Technically, the upward move yesterday was just a technical rebound, and could be short-lived, and the key index is likely to continue moving within the immediate sideways range of 1,765 to 1,795. A break of the FBM KLCI above the 1,795 level will likely see the index moving higher to test the psychological resistance level of 1,800, while a downside break of the immediate 1,765-point support level will see it sliding lower.
Overnight, the Dow fell -76.49 points or -0.50% to close at 15,177.54. Today, the FBM KLCI is likely to trade within a range of 1,760 to 1,786.
This week's expected range: 1739 – 1808
Today’s expected range: 1760 – 1786
Resistance: 1780, 1783, 1786
Support: 1760, 1764, 1770
Stocks to watch: AFFIN, AIRASIA, BAHVEST, DIGISTA, MAA, PRESBHD, SALCON, SCABLE, SCOMIES, SENDAI