KLCI 20130903Stocks on Bursa Malaysia closed higher yesterday, supported by consistent buying momentum in selected blue-chip counters. Sentiments were boosted by positive manufacturing reports around the world as well as the easing geopolitical tension in Syria. The FBM KLCI rose 6.65 points or 0.39% to close at 1,724.21,after opening 0.79 of a point better at 1,718.35 moved between 1,715.98 and 1,727.94 throughout the day. Gainers trounced losers by 436 to 274, with 299 counters unchanged. Turnover stood at 1.36 billion shares worth RM1.51 billion against 1.08 billion shares worth RM1.2 billion on Monday.

The FBM KLCI opened 0.79 of a point higher at 1,718.35 but slipped lower to the intra-day low of 1,715.98 within the first ten minutes of trading. The key index rebounded strongly from the low and moved higher to touch the intra-day high of 1,727.94 at mid afternoon before pulling back to close off high on profit-taking activity. Chart-wise, the FBM KLCI formed a bullish white candlestick which indicates appearance of buying interest which overcome the bearish reversal signal sent out by the bearish Harami candlestick pattern formed a day earlier. Nevertheless, as the FBM KLCI continued to stay below the immediate resistance of 1,727.58 after piercing through it briefly, it indicated that there are still bears that are waiting to sell at level above 1,727.

MACD continued to climb higher, and its histogram also further contracted upward, but both are still in the bearish territory, indicating a continued reduction of the bearish momentum. RSI (14) was hooked upward to 41 from 30.8, indicating the short term relative strength of the FBM KLCI has turned mildly bearish from a bearish state. Stochastic was higher at 45 from 39.7, indicating a further improvement of the market strength and continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI is becoming less bearish in the short term. However, it has not turn bullish yet, and this current improvement can also turn out to be just a technical rebound in a bigger bear market.

With yesterday's rebound, the immediate short term trend of the FBM KLCI has turned sideways with an upward bias as the key index has now closed above the immediate term 5 and 10-day SMA, but is still below the 15, 20 and 30-day SMA. Hence, the FBM KLCI is likely to move sideways range bound for the short term in order to digest the selling pressure from the short and medium term moving averages. Immediate overhead resistance zone is at 1,727 to 1,740, while the immediate downside support zone is at 1,715 to 1708.

Overnight, the Dow rose 23.65 points or +0.16% to close at 14,833.96. Today, the FBM KLCI is likely to trade within a range of 1,710 to 1,737.

This week's expected range: 1634 – 1778
Today’s expected range: 1710 – 1737

Resistance: 1728, 1733, 1737
Support: 1710, 1714, 1719