Stocks on Bursa Malaysia closed broadly higher yesterday as upbeat sentiment from overnight gains on Wall Street spurred buying interest across the board. The FBMKLCI closed at an intraday high of 1,839.55 points, up 13.87 points, or 0.76%, after touching an intraday low of 1,825.73 points. Market breadth was positive with gainers outpacing losers by 586 to 232, while 280 counters were unchanged. Total volume soared to 2.01 billion shares valued at RM2.11 billion from Tuesday’s 1.58 billion shares valued at RM1.78 billion.
Taking cue from the strong overnight gains on Wall Street, the FBMKLCI opened 0.87 of a point higher at 1,826.55 but pulled back to hit the intra-day low of 1,825.73 briefly after opening. The key index rebounded from the low and moved higher for the rest of the day with intermittent mild pullback on profit-taking activity but ended the day at the highest point of the day. Chart-wise, the FBMKLCI formed a bullish Marubozu-like candlestick which indicates the bulls were in total control for the day, and hence, the FBMKLCI is likely to continue with its upward momentum to move higher today. Immediate overhead resistance zone is at 1,840 to 1,850, while the immediate downside support zone is at 1,825 to 1,819.
MACD and its histogram continued to rise, albeit MACD is still below the zero-line, indicating further improvement in the index’s bullish momentum. RSI (14) rose to 57.3 from 51.6, indicating the short term short term relative strength of the key index has turned mildly bullish from a neutral state. Stochastic was higher at 85.4 from 72.8, indicating further strengthening of the key index and continuation of the short term up cycle. Readings from the indicators showed that the FBMKLCI is turning bullish and is likely to climb higher. However, stochastic is entering the short term overbought zone, and a pullback on profit-taking might be expected ahead.
The trend of the FBMKLCI has turned up and bullish for the short term as the key index has closed above the 30-day simple moving average (SMA) and well as the 300-day SMA. However, the key index is likely to meet strong resistance at the 1,842 to 1,849 zone posted by the 50, 60, 200 and 240-day SMA, and a close above the 60-day SMA at 1,845 would indicate that the FBMKLCI turned bullish for the medium term, while a close above the 200-day SMA at 1,849 would mean the long term bulls has regained control. Nonetheless, in order to fully reverse the downtrend, the FBMKLCI will have to move above the highest resistance at 1,861 posted by the 120-day SMA. Sentiment of the broad market is also improving as can be seen from the positive market breadth, and play on small cap and ACE market stocks has returned.
Overnight, the Dow fell 31.44 points or -0.18% to close at 16,974.31. Today, the FBM KLCI is likely to trade within a range of 1,816 to 1,853.
This week's expected range: 1770 – 1848
Today’s expected range: 1816 – 1853
Resistance: 1844, 1848, 1853
Support: 1816, 1821, 1830
Stocks to watch: ASTRO, DESTINI, EFFICEN, ESCERAM, EXTOL, GHLSYS, IFCAMSC, IJMLAND, JOHAN, KGB, KTB, MIKROMB, MMSV, PENTA, PWORTH, SCIB, SOLID, YGL
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