Stocks on Bursa Malaysia closed higher yesterday supported by consistent buying activities in selected heavyweights, while regional bourses were traded on a mixed note as investors remained cautious over the economic uncertainty in Greece. The FBM KLCI rose 7.8 points or 0.45% to 1,749.17 after hovering between 1,743.12 and 1,750.68 throughout the day. Gainers outpaced losers by 444 to 358 while 307 counters were unchanged. Total volume slipped to 1.48 billion units worth RM1.99 billion, from 1.73 billion units worth RM2.15 billion recorded on Tuesday.
The FBM KLCI opened 7.22 points higher at 1,748.59 but slipped lower on profit taking to hit the intra-day low of 1,743.12 fifteen minutes after opening. The key index rebounded from the low and climbed higher gradually for the rest of the day, and it touched the intra-day high of 1,750.68 at mid-afternoon before pulling back in the last hour on profit taking activity. Chart-wise, the FBM KLCI formed a white hammer candlestick, a bottom reversal candlestick pattern, which indicates the bears were initially in control but was later took over by the bulls. Hence, the FBM KLCI is likely to stage further rebound today on follow through buying momentum. Immediate overhead resistance zone is at 1,752 to 1,759, while the downside support zone is at 1,743 to 1,736.
MACD hooked upward slightly, while its histogram contracted upward strongly, indicating a big reduction in the bearish momentum and consolidation after the recent bearish move. RSI (14) hooked upward to 29.2 from 23.3, indicating a strong rebound. Stochastic was higher at 13.6 from 8.3, and has crossed above the slow stochastic line, indicating the possible beginning of a short term up cycle. Readings from the indicators showed that the FBM KLCI has staged a technical rebound after hitting the oversold zone, and the relief rebound may send the key index higher but a reversal will need more data to confirm.
The general trend of the FBM KLCI still remained down. However, the rebound yesterday has lifted the key index to close above the 5-day simple moving average (SMA) for the first time after staying below it for ten consecutive sessions, indicating a technical rebound or near term reversal. Nonetheless, in order to reverse the current downtrend, the FBM KLCI will have to climb at least above the 1,800-point level. For today, the FBM KLCI is likely to climb higher with the next strong overhead resistance posted by the 10-day SMA at 1,760-point. On the broader market, buying interest was slow or cautious as reflected in the low volume traded yesterday, probably due to the school holiday season which saw many investors away from the market taking a break.
Overnight, the Dow rose 64.33 points or 0.36% to close at 18,076.27. Today, the FBMKLCI is likely to trade within a range of 1,737 to 1,758.
This week's expected range: 1718 – 1801
Today’s expected range: 1737 – 1758
Resistance: 1752, 1755, 1758
Support: 1737, 1740, 1744
Stocks to watch: AEON, COCOLND, CONNECT, DUFU, EFORCE, EMICO, EURO, GESHEN, GLBHD, GUOCO, HUPSENG, JERASIA, KESM, KHEESAN, KINSTEL, SENDAI, KPSCB, MHB, POHUAT, PWROOT, SOLID, TALIWRK, UNISEM, VS, Y&G
Stock pick highlight: CONNECT (0102)
Last Price: RM0.255 +0.015
Support Level: RM0.245, RM0.22
Resistance Level: RM0.26, RM0.275, RM0.29, RM0.30, RM0.315, RM0.34, RM0.36, RM0.385, RM0.40, RM0.425, RM0.445
Entry Level: RM0.25 – RM0.26
Technical Analysis
CONNECT (0102) rebounded from its intra-day low of 0.245 to close higher at 0.255 after hitting the intra-day high of 0.26. Technically, the chart of CONNECT formed a bullish white candlestick with increasing volume indicating strong buying interest came into the stock yesterday. It breaks out from the consolidation range forming a Rectangle pattern breakout. MACD turned upward and made a golden-cross over the signal-line, and its histogram also extended upward strongly, indicating a change in momentum to the upside and a buy signal. RSI (14) rose to 70.7 from 62.4, indicating the stock is turning very bullish. Stochastic climbed higher to 83.3 from 73.3 and is above the slow stochastic line, indicating the stock is turning stronger after recent consolidation. The medium and long term trend of CONNECT is up, and the short term trend is also up with the 5-day SMA staying above the 10-day SMA and both are above the 30-day SMA, and a confirmed breakout above RM0.26 will see an upside target of RM0.275, follow by RM0.29, RM0.30, RM0.315, RM0.34, RM0.36, RM0.385, RM0.40, RM0.425 and RM0.445.
Since the short term trend is bullish, day traders with shorter time frame perspective may ride on the short term bullishness and buy on breakout level (RM0.26). Those with lower risk appetite should wait at the side-line and buy on the dip.
Price Objective
Short Term – target price at (RM0.275, RM0.29, RM0.30 RM0.315, RM0.34), stop loss (RM0.24)
Mid Term – target price at (RM0.36, RM0.385, RM0.40, RM0.425, RM0.445), stop loss (RM0.215)
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