Stocks on Bursa Malaysia edged higher yesterday with most indices recording positive movement and in line with the rise on regional bourses. The FBMKLCI ended 3.23 points or 0.18% better at 1,842.78 points after hovering between 1,838.04 points and 1,843.89 points throughout the day. Market breadth was positive with gainers outpacing losers by 509 to 339, while 295 counters were unchanged. Total volume fell to 1.87 billion shares valued at RM2.15 billion from Wednesday’s 2.01 billion shares valued at RM2.11 billion.
Tracking the mild profit-taking correction of the Dow overnight, the FBMKLCI opened 0.24 points lower at 1,839.31 and slipped lower to hit the intra-day low of 1,838.04 within the first fifteen minute after opening. The key index rebounded from the low and moved higher to touch the intra-day high of 1,843.89 at noon but staged a mild pulled back in the afternoon session on profit-taking activity. Chart-wise, the FBMKLCI formed a bullish white which indicates the bulls were still in control. However, the upward momentum has reduced as the body of the candlestick is much smaller as compared with previous day’s candlestick, indicating the bulls are turning cautious. Immediate overhead resistance zone is at 1,845 to 1,854 with 1,850 being the important psychological barrier, and the immediate downside support zone is at 1,838 to 1,825.
MACD and its histogram continued to climb higher, indicating further increased in the bullish momentum. RSI (14) rose to 58.5 from 57.3, indicating further improvement of the short term relative strength in the mildly bullish zone. Stochastic rose to 96.7 from 85.4, indicating very strong index strength but is entering the stochastic short term overbought zone. Readings from the indicators showed that the FBMKLCI is turning bullish but is overbought on the stochastic, and hence a pullback consolidation might be expected ahead.
The short term trend of the FBMKLCI has turned up as the key index is closing above all the short term moving averages, and in particular, the 5-day simple moving average (SMA) has made a golden-cross over the 30-day SMA. The FBMKLCI has also crossed over the medium term 50-day SMA yesterday, further strengthening the short term uptrend. Immediate strong overhead resistance zone posted by a cluster of medium to long term moving averages is at 1,845 to 1,861, with the 60 and 240-day SMA posting the resistance at 1,845 and the 200-day SMA at 1,849. With volume gradually picking up and the number of gainers outpacing losers, speculative rotational play on small cap and ACE market counters has returned to the market.
Overnight, the Dow rose 221.11 points or 1.30% to close at 17,195.42. Today, the FBM KLCI is likely to trade within a range of 1,833 to 1,849.
This week's expected range: 1770 – 1848
Today’s expected range: 1833 – 1849
Resistance: 1845, 1847, 1849
Support: 1833, 1835, 1839
Stocks to watch: AAX, BIG, BPLANT, CAP, DBHD, DNEX, FGV, GADANG, GOCEAN, HOMERIZ, LEONFB, MEGB, MKLAND, MYEG, NAIM, OPENSYS, PMBTECH, RSAWIT, SMRT, TDM
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