Stocks on Bursa Malaysia ended firmer yesterday in line with most regional bourses, driven by bargain hunting on beaten down stocks in selected heavyweights following a substantial decline the day before. A string of positive news helped uplift the FBM KLCI after trading in the red since Monday. Prime Minister Datuk Seri Najib Tun Razak said the government is looking at various policy options to strengthen the country’s fiscal and macro position. This came after Fitch Ratings revised Malaysia’s sovereign credit rating outlook from stable to negative while affirming the country’s long-term foreign and local currency at ‘A-‘ and ‘A’ respectively. The FBM KLCI finished 5.20 points or 0.29% higher at 1,777.82 after hovering between 1,782.72 and 1,766.70 throughout the day. Gainers thumped losers 537 to 233 with 290 counters unchanged. Total volume declined to 1.458 billion shares valued at RM2.129 billion, from 1.918 billion shares valued at RM3.056 billion on Wednesday.
The FBM KLCI opened 3.09 points higher at 1,775.71 and slipped to the intra-day low of 1,766.70 within the first ten minutes of trading, but the key index managed to stage a strong rebound from there and moved higher for the rest of the day to touch the intra-day high of 1,782.72 before pulling back slightly to close off high. Chart-wise, the FBM KLCI formed a high-wave white spinning-top candlestick which indicates uncertainty of market direction but with an upward bias as the index is still closing above the mid range of the day. The appearance of the white spinning-top candlestick with a long lower shadow also indicate strong buying support and a pause to the prior down move. Hence, the FBM KLCI is likely to stage a technical rebound today with immediate overhead resistance zone at 1,782 to 1,791, while the downside support zone is at 1,766 to 1,762.
MACD and its histogram continued to slide lower, indicating a further loss in the momentum. RSI (14) hooked upward to 46.1 from 42.7, reflecting the rebound in the key index, but the short term relative strength of the key index is still in the mildly bearish state. Stochastic continued to slide lower to 26.2 from 43.5, indicating the market is still weak and continuation of the short term down cycle. Readings from the indicators showed that the FBM KLCI is technically still weak, and is likely to continue to consolidate.
The immediate short term trend of the FBM KLCI is down as the index is closing below the 5, 10, and 20-day SMA. However, the rebound yesterday have lifted the key index to close just above the 30, 50 and 60-day SMA, and the medium and long term trend is still up. The support at 1,766 is especially important as it marks the 50% retracement level for the uptrend range from the pivot low of 1,723.74 on June 25 to the pivot high of 1,811.65 on July 26, and a break of this level will see the FBM KLCI turning bearish for the short term. In order for the FBM KLCI to reverse its current short term downtrend, it will have to at least move above 1,790.
Overnight, the Dow rose +128.48 points or +0.83% to close at a fresh record high of 15,628.02. Today, the FBM KLCI is likely to trade within a range of 1,752 to 1,798.
This week's expected range: 1785 – 1826
Today’s expected range: 1752 – 1798
Resistance: 1784, 1791, 1798
Support: 1752, 1759, 1768
Stocks to watch: CUSCAPI, DAYA, IRCB, LBS, SALCON, SERSOL, TEXCHEM