Stocks on Bursa Malaysia closed broadly higher yesterday with the benchmark FBM KLCI staging one of the strongest rallies in recent weeks. The rise was in line with positive performance of other regional bourses as upbeat Chinese trade and inflation data lifted Chinese shares to three-month highs and boosted regional markets. The FBM KLCI rose 23.23 points or 1.35% to 1,747.03 after opening 2.47 points higher at 1,726.27 and moved between 1,726.27 and 1,747.03. Gainers beat losers by 568 to171, while 266 counters were unchanged. Turnover rose to 1.28 billion shares worth RM1.60 billion against last Friday's 1.10 billion shares worth RM1.45 billion.
The FBM KLCI opened 2.47 points higher with an upside breakaway gap at 1,726.27, the lowest point of the day and moved higher steadily for the rest of the day, and to close at the highest point of the day. Chart-wise, the FBM KLCI formed a bullish long white Marubozu candlestick which breaks away from last week's consolidation range, indicating the resurfacing of strong buying interest on blue-chip stocks after recent correction. Hence, the FBM KLCI is likely to climb higher today if the buying momentum continues. Immediate strong overhead resistance zone is at 1,754 to 1,766, while the downside support zone is at 1,726 to 1,715.
MACD continued to climb higher after making a golden-cross, and the histogram also extended upward strongly in the positive zone, indicating an increased in the bullish upward momentum. RSI (14) rose to 51.6 from 42.1, indicating the short term relative strength of the FBM KLCI has turned mildly bullish from a mildly bearish state. Stochastic was higher at 63.65 from 48.4, indicating the short term market strength has turned stronger, and continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI has turned mildly bullish for the short term, and the increased in positive momentum is likely to push the key index higher.
With the bullish move yesterday, the short term trend of the FBM KLCI has turned up as the key index is now closing above the short term 5, 10 , 15 and 20-day SMA. Nevertheless, the FBM KLCI is still below the medium term 30, 50 and 60-day SMA, and the key index has also for the first time closing above the long term 120-day SMA after crossing below it on August 22nd, but is still below the 100-day SMA which is currently at 1,760. The situation indicated a possible trend change is in the brewing. However, to reverse the medium term downtrend, the FBM KLCI will have to breakthrough all the overhead moving average resistances with the critical resistance level at 1,766.
Overnight, the Dow rose 140.62 points or +0.94% to close at 15,063.12. Today, the FBM KLCI is likely to trade within a range of 1,712 to 1,767.
This week's expected range: 1682 – 1753
Today’s expected range: 1712 – 1767
Resistance: 1754, 1760, 1767
Support: 1712, 1719, 1733
Stocks to watch: DESTINI, GPACKET, GPACKET-WA, IRCB, IRCB-WA, PELIKAN, SERSOL, SERSOL-WA, UCHITEC