Stocks on Bursa Malaysia closed higher yesterday with the benchmark FBMKLCI closing at a new all-time high, boosted by firm buying from foreign investors with interest seen in selected heavyweights. The key index rose 3.73 points or 0.2% to settle at 1,887.07, surpassing the previous all-time high of 1,883.34 recorded on May 16. The index hit an intra-day high of 1,889.47 earlier in the day. Market breadth was positive as advancers outpaced decliners by 413 to 382, with 330 counters unchanged. Volume increased to 2.324 billion shares worth RM2.389 billion from 1.68 billion shares worth RM2.301 billion on last Friday.
Taking cue from the positive close on Wall Street last Friday, the FBMKLCI opened higher with an upside gap of 1.54 points at 1,884.88 and slipped lower on mild profit-taking activity to hit the intra-day low of 1,884.31 within the first five minutes after opening. The key index rebounded from the low and moved higher gradually to touch the intra-day high of 1,889.47, a fresh all-time intra-day high, but pulled back on late hour profit-taking to close off-high. Chart-wise, the FBMKLCI formed a white shooting star-like candlestick, a top reversal candlestick pattern which indicates mild profit-taking activity amid a bullish upward move as the index loss almost half of its day’s range. Hence, the FBMKLCI is likely to continue its uptrend today with mild bearish bias on profit-taking activity as investors sell into strength. Immediate overhead resistance is at 1,889, while the immediate downside support zone is at 1,884 to 1,882.
MACD and its histogram continued to extend higher, indicating an increase in the bullish momentum. RSI (14) was higher at 70.8 from 68.8, indicating the key index has turned very bullish from a bullish state before, and has entered the short term overbought zone for the first time after falling below it on December 31st, 2013. Stochastic, however, hooked downward to 96.3 from 98.1, indicating a possible pullback is in sight despite the index standing at an all-time high level. Readings from the indicators showed that the FBMKLCI is in a very bullish state, however, it is running into an overbought situation and a correction is imminent.
The trend of the FBMKLCI is up and bullish as the key index closed at an all-time high level. Hence, the FBMKLCI is likely to continue its uptrend to move higher to the 1,900 target level. However, signs are there that the FBMKLCI may face more profit-taking resistance if it cannot surpass the 1,889-point top resistance, and the gap formed yesterday may become an exhaustion gap if the FBMKLCI close below 1,882. The current bullish sentiment may continue for a few days before heavy profit-taking activity appear.
Overnight, the Dow rose 20.55 points or 0.12% to close at 16,511.86. Today, the FBM KLCI is likely to trade within a range of 1,879 to 1,894.
This week's expected range: 1852 – 1902
Today’s expected range: 1879 – 1894
Resistance: 1889, 1892 1894
Support: 1879, 1881, 1884
Stocks to watch: ASTRO, BENALEC, BERTAM, D&O, DIGISTA, FARLIM, KIALIM, KPS, PENERGY, SCICOM, SEALINK, SILKHLD, SONA, WZSATU
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