Stocks on Bursa Malaysia rebounded to close broadly higher yesterday after two consecutive days of losses, moving in tandem with most Asian equity markets after the US Federal Reserve said it would not rush into raising interest rates. However, the local market players were cautious ahead of the Budget 2015 to be tabled today. The benchmark FBMKLCI rose 5.41 points or 0.30% to close at 1,829.73 after moving between 1,824.95 and 1,830.80 throughout the day. Market breadth was positive with advancers trouncing decliners by 609 to 229 while 266 counters were unchanged. Total volume reduced to 1.81 billion shares worth RM1.85 billion compared with 2.57 billion shares worth RM2.49 billion on Wednesday.
Taking cue from the strong rebound on Wall Street overnight, the FBMKLCI opened 0.86 points higher at 1,825.18 and pulled back to hit the intra-day low of 1,824.95 ten minutes after opening. The key index rebounded from the low and moved higher gradually to touch the intra-day high of 1,830.80 at noon time but pulled back on profit-taking in the afternoon session. Chart-wise, the FBMKLCI formed a bullish white candlestick in Harami position, a bottom reversal candlestick pattern which indicates a fight back of the bulls after being beaten badly for two consecutive days. Hence, the FBMKLCI may continue its rebound to move higher today. However, the gap area at 1,831 to 1,833 is posting as the immediate overhead resistance zone, while the downside support zone is at 1,824 to 1,821.
MACD slid lower marginally, while its histogram contracted upward slightly, indicating a state of consolidation. RSI (14) hooked upward to 35.4 from 29.5, indicating a technical rebound and the short term relative strength of the key index has move back to the bearish zone after hitting the very bearish zone briefly. Stochastic, however, continued to slip lower to 11.4 from 19.4, indicating a continuation of the down cycle and weakness. Readings from the indicators showed that the FBMKLCI staged a technical rebound yesterday after hitting the RSI oversold zone, and the key index is likely to stay in consolidation until more concrete reversal signals are seen.
The trend of the FBMKLCI still remained down and bearish as the key index continues to stay below the short, medium and long term moving averages. Nonetheless, the rebound yesterday lifted the key index to close just marginally below the 300-day simple moving average (SMA), indicating some long term buying support was appearing at current level, but the buying momentum was not very strong, and hence, the FBMKLCI is likely to stay in consolidation today ahead of the Budget 2015 announcement at 4 pm. The longer term moving average support by the 360-day SMA is currently at 1,819, and a further break of this support level will officially see the FBMKLCI going into a bear phase. Based on Elliott wave study, the current C-wave has a downside target of 1,821, the 100% projection level, follows by 1,805, 1,799 and 1,785, the 161.8% projection level.
Overnight, the Dow plunged 334.97 points or -1.97% to close at 16,659.25. Today, the FBM KLCI is likely to trade within a range of 1,820 to 1,836.
This week's expected range: 1817 – 1870
Today’s expected range: 1820 – 1836
Resistance: 1832, 1834, 1836
Support: 1820, 1822, 1826
Stocks to watch: CENSOF, EFFICEN, ESCERAM, GHLSYS, GOODWAY, HALEX, IFCAMSC, INIX, KSSC, KSL, MMSV, MYEG, NIHSIN, OSK, SEACERA, VSOLAR, YGL
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