Stocks on Bursa Malaysia continued its rebound from last Friday to close higher yesterday in tandem with most regional peers, as upbeat US data late last week calmed the global financial markets and reassured investors worried about the performance of the world's biggest economy. The benchmark FBMKLCI rose 14.83 points or 0.83% to 1,803.14. Gainers outpaced losers by 569 to 305 with 261 counters unchanged. Total volume shrank to 2.05 billion shares worth RM2.21 billion from 2.30 billion shares worth RM2.48 billion last Friday.
Tracking the strong rebound on Wall Street last Friday, the FBMKLCI opened higher with an upside runaway gap of 1.76 points at 1,790.07 and climbed higher for the rest of the day. The key index hit the intra-day high of 1,804.04 in the afternoon and pulled back on profit-taking to below the 1,800-point psychological support level. However, some late hour buying managed to push the FBMKLCI to close near the high of the day. Chart-wise, the FBMKLCI formed a bullish white candlestick which indicates the bulls or buyers were in charge for the day. Hence, the FBMKLCI is likely to continue its upward momentum to move higher today. Immediate strong overhead resistance zone is at 1,808 to 1,822, while the immediate downside support zone is at 1,790 to 1,780.
MACD hooked upward for the first time after sliding southward for nine consecutive sessions, and its histogram also contracted upward for the second bar, indicating a big reduction in the bearish downward momentum or an increased in the upward momentum. However, as MACD is still below its signal-line as well as below the zero-line, the current upward trend may well be just a technical rebound in a bear market. RSI (14) was higher at 40.1 from 31.5, indicating a bullish upward move that pulled the short term relative strength of the key index from a bearish state to a mildly bearish state. Stochastic continued to climb higher to 22.5 from 9.1, indicating bottom reversal of the key index and continuation of the short term up cycle. Readings from the indicators showed that the FBMKLCI is staging a strong technical rebound, and is likely to climb higher if the buying momentum continues into today.
The broad trend of the FBMKLCI still remained down. However, with the bullish upward move over the last two sessions, the immediate near term trend of the FBMKLCI has turned up as the key index has for the first time closed above the 5-day simple moving average (SMA) after staying below it for eleven consecutive sessions. However, the FBMKLCI is still below the 10-day SMA which is currently at 1,803.61, and it requires more efforts to break the overhead resistances posted by the short, medium and long term moving averages to reverse the current downtrend. The FBMKLCI will need to at least climb above the 360-day SMA which is currently at 1,820-point level in order to regain its long term bullish posture.
Overnight, the Dow rose 19.26 points or 0.12% to close at 16,399.67. Today, the FBM KLCI is likely to trade within a range of 1,780 to 1,818.
This week's expected range: 1723 – 1851
Today’s expected range: 1780 – 1818
Resistance: 1808, 1813, 1818
Support: 1780, 1785, 1794
Stocks to watch: BJAUTO, BORNOIL, BPLANT, CBIP, GAMUDA, LUXCHEM, MUHIBAH, MUH, TOPGLOV, TSH, UNISEM, UOADEV, WZSATU
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