Stocks on Bursa Malaysia closed broadly higher yesterday on bargain hunting. The FBMKLCI ended 12.46 points or 0.67% firmer at 1,875.8, after opening at an intra-day low of 1,864.19. Advancers trounced decliners by 555 to 329, with 301 counters unchanged. Total volume increased to 3.01 billion units valued at RM2.239 billion from 2.08 billion units valued at RM1.942 billion last Friday.
The FBMKLCI rebounded to opened 0.85 of a point higher at the intra-day low of 1,864.19 and climbed higher for the rest of the day with mild intermittent profit-taking. The key index ended at the highest point of the day. Chart-wise, the FBMKLCI formed a bullish Marubozu candlestick which indicates a reversal after the recent sell off and the candlestick also covered the gap formed last Friday, indicating a possible exhaustion of the current downtrend, and hence, the FBMKLCI is likely to continue its rebound yesterday to move higher today. Immediate overhead resistance zone is at 1,880 to 1,886, while the immediate downside support is at 1,860.
MACD hooked upward slightly, while the histogram contracted upward strongly, indicating a rebound. However, as MACD is still below the zero-line and also below the signal-line, the rebound may well be just a technical correction. RSI (14) hooked upward strongly to 48.4 from 36.7, indicating a strong rebound which sent the short term relative strength back to the mildly bearish zone from a bearish zone. Stochastic hooked upward to 21.8 from 19.4, indicating a rebound as it is still below the slow stochastic line. Signals from the indicators showed that the FBMKLCI is staging a strong rebound after the recent sell off, and the upward momentum may carry the index higher.
The short and medium term trend of the FBMKLCI still remained down. However, the strong rebound yesterday has sent the key index to close above the short term 5 and 10-day SMA, giving an early sign of possible reversal. Nevertheless, in order for the FBMKLCI to reverse the current downtrend, it will have to break through the cluster of short and medium term moving averages which posts as the overhead resistances, and the highest resistance level posted by the 30-day SMA is at 1,882. Nonetheless, the underlying long term trend is still up, and the market is likely to see active rotational play on the small cap and penny stocks.
Overnight, the Dow rose 75.91 points or 0.46% to close at 16,569.28. Today, the FBM KLCI is likely to trade within a range of 1,856 to 1,887.
This week's expected range: 1829 – 1911
Today’s expected range: 1856 – 1887
Resistance: 1879, 1883, 1887
Support: 1856, 1860, 1868
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