Stocks on Bursa Malaysia closed higher yesterday, propped up by gains on blue-chips especially Hong Leong-related counters. The benchmark FBMKLCI gained 10.56 points or 0.57% to 1,872.38 after moving between 1,861.73 and 1,878.71 throughout the day. Losers led gainers by 439 to 410 while 311 counters remain unchanged. Total volume fell to 2.63 billion units worth RM2.4 billion from 3.29 billion units worth RM2.11 billion on Tuesday.
Taking cue from the positive close of Wall Street overnight, the FBMKLCI opened 0.2 of a point higher at 1,862.02. The key index pulled back to hit the intra-day low of 1,861.73 briefly after opening but rebounded strongly and rallied to hit the intra-day high of 1,878.71 within the next thirty minutes. However, the rise saw no follow through and the key index pulled back on profit taking activity to move sideways for the rest of the day. Chart-wise, the FBMKLCI formed a bullish white candlestick which reversed its prior downtrend, and hence, the FBMKLCI is likely to move higher today if the buying momentum on blue-chips continues. Immediate overhead resistance zone is at 1,878 to 1,886, while the immediate downside support zone is at 1,861 to 1,859.
MACD hooked upward, and its histogram also extended upward, indicating an increase in the bullish momentum. RSI (14) swung up to 52.3 from 45.2, indicating a change in the short term relative strength from mildly bearish to mildly bullish. Stochastic hooked upward slightly to 67.8 from 66.7, but is still below the slow stochastic line, indicating a technical rebound. In short, readings from the indicators showed that the FBMKLCI is staging a strong technical rebound, and hence, might continue to move higher if there is follow-through buying.
With the bullish upward move yesterday, the FBMKLCI has reversed its near term trend from down to up as the key index has closed above the short term moving averages. Nevertheless, the strong rebound yesterday was met with strong resistance at the medium term 50 and 60-day moving average level and made a pullback. If the FBMKLCI is able to make a breakthrough of the 50 and 60-day SMA resistance at 1,875-point level, the key index may continue to climb higher, otherwise, it is likely that the FBMKLCI may continue to stay range-bound. Nonetheless, the long term uptrend is still intact. On the broader market, rotational play on small caps and penny stocks may take a breather as the volume has fallen below the three billion shares mark.
Overnight, the Dow rose 15.31 points or 0.09% to close at 17,122.01. Today, the FBM KLCI is likely to trade within a range of 1,846 to 1,895.
This week's expected range: 1841 – 1898
Today’s expected range: 1846 – 1895
Resistance: 1880, 1887, 1895
Support: 1846, 1853, 1863
Stocks to watch: ASIABIO, DPS, EFFICEN, EMICO, GHLSYS, IBHD, IFCAMSC, JAVA, KPJ, MASTEEL, MMSV, MUIIND, MUIPROP, OCNCASH, OLYMPIA, PMHLDG, SCH, WILLOW, ZECON
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