Stocks on Bursa Malaysia closed higher yesterday with the benchmark FBMKLCI closed slightly higher on late buying interest in plantation stocks. The FBMKLCI rose by 1.47 points or 0.08% to close at 1,825.64 points after moving between 1,821.75 and 1,826.73 throughout the day. Market breadth was positive as gainers thumped losers by 421 to 398, while 320 counters were unchanged. Volume declined to 2.47 billion shares worth RM2 billion from 2.71 billion shares worth RM2.34 billion on Tuesday.
The FBMKLCI opened 2.21 points lower at 1,821.96 and slipped to the intra-day low of 1,821.25 right after opening. The key index rebounded strongly and rallied to the intra-day high of 1,826.73 within the next ten minutes, but the rally did not continue, and the key index slipped lower into the negative territory to move sideways for a major part of the day on heavy profit-taking activity. A last minute buying of selected blue-chips managed to lift the index to close in the positive territory. Chart-wise, the FBMKLCI formed a small white candlestick which continued its prior uptrend. The small body candlestick indicated that the bullish upward momentum is reducing, and the intra-day movement of the key index also showed that heavy profit-taking activity has set in. Hence, the FBMKLCI is likely to pause for a breather after rising continuously for six consecutive sessions. Immediate overhead resistance zone is at 1,826 to 1,830, while the immediate downside support zone is at 1,821 to 1,816.
MACD and its histogram continued to climb higher, indicating a continued increased in the upward momentum. Nevertheless, MACD is still below the zero-line, hence, the FBMKLCI is not fully bullish yet, and hence, the current uptrend should be taken cautiously. RSI (14) was slightly higher at 55.8 from 55.3, indicating a mild gain in the relative strength. Stochastic was higher at 96.9 from 83.9, indicating a very strong market strength. However, the key index has entered the stochastic overbought zone. Readings from the indicators showed that the FBMKLCI is losing its upward momentum, and is overbought, and hence, a pullback correction is imminent.
The trend of the FBMKLCI is up as the key index is now closing above all the moving averages. It has also closed above the 30 and 50-day SMA, indicating the key index has turned bullish for the short term. Nevertheless, for the medium term, it is still sideways as it has just recovered half of the range it lost from 1,882.20 to 1,769.80. The long term trend, nonetheless, is still up.
Overnight, the Dow fell 30.83 points or 0.19% to close at 15,963.94. Today, the FBM KLCI is likely to trade within a range of 1,817 to 1,831.
This week's expected range: 1754 – 1839
Today’s expected range: 1817 – 1831
Resistance: 1827, 1829, 1831
Support: 1817, 1819, 1822
Stocks to watch: E&O, EDUSPEC, GTRONIC, IRIS, JCY, MAYBULK, PICORP
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