Stocks on Bursa Malaysia closed mixed yesterday, bolstered by finance-linked counters with Hong Leong Financial gaining 38 Sen to RM17.76, and bargain hunting also lifted the market, which has been on five straight weeks of correction. The FBMKLCI finished 5.84 points or 0.32% higher at 1,846.34, after opening better at 1,841.05 and hovered between 1,839.2 and 1,846.75 throughout the day. Market breadth was negative as losers outpaced gainers by 436 to 371, while 352 counters were unchanged. Total volume rose to 2.6 billion shares valued at RM1.88 billion from 2.49 billion shares worth RM1.79 billion last Friday.
Taking cue from a strong rebound on Wall Street last Friday, the FBMKLCI opened 0.55 of a point higher at 1,841.05 but slipped lower on mild profit-taking activity to hit the intra-day low of 1,839.20 at midmorning. The key index rebounded from the low and moved higher gradually for the rest of the day to hit the intra-day high of 1,846.75 just before closing, and it pullback slightly on last minute mild profit-taking. Chart-wise, the FBMKLCI formed a bullish white candlestick which indicates the bulls or buyers were in control for the day, and it also served to confirm the bottom reversal signal generated by the bullish white hammer candlestick on last Friday. Hence, the FBMKLCI is likely to move higher today if the buy momentum continues into today. Immediate overhead resistance zone is at 1,850 to 1,855, while the downside support zone is at 1,839 to 1,829.
MACD turned upward for the first time after sliding southward consecutively for twelve sessions, and its histogram also further contracted upward, indicating an initial reversal. Nonetheless, MACD is still below the signal-line and the zero-line, and hence, current upswing may turn out to be just a technical rebound in a bearish market, and more data is required to confirm the reversal. RSI (14) was higher at 41.9 from 35.8, indicating a strong rebound, and the short term relative strength of the key index has improved to mildly bearish from a bearish state. Stochastic was higher at 28.3 from 21.9, indicating an improvement in the index strength and the possible beginning of a short term up cycle. Readings from the indicators showed that the FBMKLCI is staging a technical rebound, and the rebound momentum may send the key index higher.
The general trend of the FBMKLCI is still down. However, with yesterday’s rebound, the FBMKLCI has closed above the short term 5 and 10-day simple moving average (SMA), indicating a short term trend change which might see the key index moving higher to test the overhead resistance zone of 1,852 to 1,870 posted by a cluster of short, medium and long term moving averages. The bullish upward move yesterday also saw the key index closing above the long term 240-day SMA which is a bullish signal. However, the key index is still below the 200-day SMA which is currently at 1,852. With the month of September and the third quarter coming to a close today, it is likely to see more window dressing activity by fund managers which will further prop up the key index.
Overnight, the Dow fell 41.93 points or -0.25% to close at 17,071.22. Today, the FBM KLCI is likely to trade within a range of 1,833 to 1,854.
This week's expected range: 1806 – 1874
Today’s expected range: 1833 – 1854
Resistance: 1849, 1851, 1854
Support: 1833, 1836, 1841
Stocks to watch: AWC, ESCERAM, FARMBES, GUNUNG, IQGROUP, KSSC, KIMHIN, LEONFB, MUIIND, MUIPROP, MCLEAN, MFCB, PANPAGE, PANTECH, SASBADI, SCICOM, SCOMIEN, WZSATU
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