Stocks on Bursa Malaysia closed firmer yesterday on foreign buying of heavyweights and blue-chips as investors took advantage of positive sentiment across Asia and globally following China's firm manufacturing data as well as decline in global oil prices. The FBM KLCI advanced 17.92 points, or 1.026%, to 1,764.95 after opening 6.11 points higher at 1,753.14, and moved between 1,753.14 and 1,774.14. Gainers thumped losers by 592 to 182, with 299 counters unchanged. Turnover improved to 1.811 billion shares worth RM2.402 billion versus 1.279 billion shares worth RM1.603 billion on Monday.
Taking cue from the strong performance of Wall Street overnight and continuing the previous day's strong buying momentum, the FBM KLCI opened higher with an upside gap of 6.11 points at 1,753.14, the intra-day low, and rallied to touch the intra-day high of 1,774.14 at mid morning, gaining 27.11 points at its best, and heavy profit-taking activity sent the key index to close off high. Chart-wise, the FBM KLCI formed a bullish white candlestick with an upside runaway gap which indicates the bulls or the buyers were in a state of euphoria and snap up more shares. Hence, the FBM KLCI is likely to climb higher today if the buying momentum continues into today. Immediate overhead resistance zone is at 1,766 to 1,777, while the downside support zone is at the gap area of 1,753 to 1,747.
MACD and its histogram continued to climb higher, indicating a further increased in the bullish momentum. RSI (14) was higher at 57.5 from 51.6, indicating the key index has turned mildly bullish for the short term. Stochastic continued to climb higher to 80.4 from 63.6, indicating a further improvement in the short term market strength, and continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI is turning bullish gradually, and the upward momentum is likely to push the index higher.
The short term trend of the FBM KLCI has turned up, while the medium term trend may have turned sideways as the short term moving averages are still staying below the medium term moving averages. The long term trend, nevertheless, still remained up. As mentioned in yesterday's analysis, the 1,766-point level is a critical resistance level as it is the pivot low or support formed on August 1 which coincides with the 50 and 60-day SMA resistance level, and a break above this resistance level will see the FBM KLCI moving higher to the next target level of 1,777 to 1,780 which also indicates the prior downtrend was over. The present up move has also breakout from the inverse head-and-shoulder pattern which formed on August 22 to September 6, and this breakout has an upside target of 1,795.
Overnight, the Dow rose 127.94 points or +0.85% to close at 15,191.06. Today, the FBM KLCI is likely to trade within a range of 1,733 to 1,795.
This week's expected range: 1682 – 1753
Today’s expected range: 1733 – 1795
Resistance: 1775, 1785, 1795
Support: 1733, 1743, 1754
Stocks to watch: DESTINI, LBS, MUHIBAH, PELIKAN, PENERGY, PERDANA, SALCON, SERSOL, SERSOL-WA, SUMATEC, SUMATEC-WA, TAS, TGOFFS