Stocks on Bursa Malaysia closed in positive territory yesterday, as overnight gains in US stocks breathed life into the local bourse. Strong buying interest was seen in the local market yesterday, despite the fall in most Asian stocks, following reports that the US Federal Reserve would continue its stimulus efforts given the weak economic climate. The FBM KLCI ended at 1,806.61, up 3.56 points or 0.20% after hitting an intra-day low of 1,798.46. Gainers edged losers by 417 to 362, with 328 counters unchanged. Total volume stood at 1.976 billion shares worth RM1.898 billion against 2.121 billion shares worth RM2.127 billion on Wednesday.
Taking cue from the strong overnight performance on Wall Street, the FBMKLCI opened 1.03 points higher at 1,804.08 but plunged to the intra-day low of 1,798.46 within the first five minutes after opening. However, the key index rebounded quickly and move higher gradually to close at the highest point of the day. Chart-wise, the FBMKLCI formed a bullish white hammer candlestick, a bottom reversal candlestick pattern, which indicates buying support appearing after the FBMKLCI hit below the psychological support level of 1,800, and the key index has found a temporary bottom at 1,798. Hence, the FBMKLCI might continue its rebound to move higher today.
MACD and its histogram continued to slide lower, indicating a continued loss in the key index's momentum. RSI(14) hooked upward to 57.4 from 54.9, indicating a rebound, and the short term relative strength of the FBMKLCI is still mildly bullish. Stochastic continued to slide lower to 44.2 from 58.3, indicating a further weakening of the index, and continuation of the short term down cycle. Readings from the indicators showed that the FBMKCI is currently in a consolidation mode, and the rebound yesterday was not strong enough to change the technical picture yet, and hence the consolidation is likely to extend.
The short term trend of the FBMKLCI remained down as the index continued to stay below the 5, 10 and 15-day SMA, and the 5-day SMA has also crossed below the 10 and 15-day SMA, indicating short term weakness may persist. Nonetheless, the FBMKLCI rebounded from the 20-day SMA after piercing through it, indicating there were some good buying support at the 20-day SMA level. With the 5, 10 and 15-day SMA acting as overhead resistance, and the 20 and 30-day SMA acting as the downside support, the FBMKLCI is likely to stay sideways range-bound for the time being until a breakout is seen on either side of the range. Immediate overhead resistance zone is at 1,810 to 1,813, while the immediate downside support zone is at 1,800 to 1,798.
Overnight, the Dow fell -152.90 points or -0.97% to close at 15,593.98 after hitting a fresh record high on Wednesday. Today, the FBM KLCI is likely to trade within a range of 1,793 to 1,814.
This week's expected range: 1780 – 1841
Today’s expected range: 1793 – 1814
Resistance: 1809, 1812, 1814
Support: 1793, 1795, 1801
Stocks to watch: CYPARK, DIALOG, JTIASA, MUDA, SERSOL, SERSOL-WA, TGOFFS, THHEAVY, WCT
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