Stocks on Bursa Malaysia closed firmer yesterday on persistent buying support after earlier losses, as financial stocks and blue-chips helped the FBM KLCI move into positive territory. The FBM KLCI rose 1.6 points, or 0.09%, to close at 1,775.14, after opening 1.56 points lower at 1,771.98 and hovered between 1,767.5 and 1,775.76 throughout the day. Losers led gainers by 386 to 351, with 257 counters unchanged. Total volume fell to 1.097 billion shares worth RM1.566 billion from 1.48 billion shares worth RM2.73 billion on last Friday.
Taking cue from the weak close on Wall Street last Friday, the FBM KLCI opened 1.56 points lower at 1,771.98, and slipped to the intra-day low of 1,767.50 in the first half an hour of trading. The key index rebounded and moved higher for the rest of the day with intermittent weak pullback, it hit the intra-day high of 1,775.76 before pulling back to close off high. Chart-wise, the FBM KLCI formed a non typical white hanging-man candlestick, a potential top reversal candlestick pattern which indicates the appearance of mild selling pressure initially but was well absorbed. Hence, the key index may pause for consolidation before continuing its uptrend journey. Immediate overhead resistance zone is at 1,782 to 1,792, follow by 1,795, while the downside support zone is at 1,767 to 1,754.
MACD continued to climb higher but is still below the zero-line, and the histogram further contracted upward, indicating a further reduction of the bearish momentum, or the building up of the bullish momentum. RSI (14) was marginally higher at 55.7 from 55.2, indicating the key index is still in a mildly bullish state. Stochastic was higher at 65.8 from 45.8, indicating the building up of the market strength and continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI is gradually turning bullish, and the upward momentum is building up.
The short term trend of the FBM KLCI has turned up, and the longer term uptrend still remained intact. However, from the chart pattern formed, the FBM KLCI is still trapped within a sideways range-bound rectangle, unless the key index is able to break above the upper boundary of 1,795, it is still likely to stay sideways range-bound for the short term. Volume dwindled drastically to just slightly above one billion shares, giving a first signal that the market might be heading for more consolidation as the Ramadan month approaches.
Overnight, the Dow rebounded 65.36 points or +0.44% to close at 14,974.96. Today, the FBM KLCI is likely to trade within a range of 1,761 to 1,784.
This week's expected range: 1707 – 1807
Today’s expected range: 1761 – 1784
Resistance: 1778, 1781, 1784
Support: 1761, 1764, 1769
Stocks to watch: JAKS, SALCON, KPS