Stocks on Bursa Malaysia closed firmer yesterday, as investors continue their buying support on the back of the country's better industrial production data, which was released earlier yesterday. The Statistics Department said Malaysia's Industrial Production Index (IPI) grew by 7.6 percent in July when compared with the same month a year ago, boosted by manufacturing, mining and electricity. The FBM KLCI rose 3.53 points or 0.20% to 1,768.48 after opening 4.75 points higher, and moved between 1,763.05 and 1,776.11. Gainers led losers by 402 to 384, with 289 counters unchanged. Turnover rose to 1.99 billion units worth RM2.227 billion from Tuesday's 1.811 billion shares worth RM2.402 billion.
Taking cue from the strong performance of the Dow overnight, the FBM KLCI opened higher with an upside gap of 4.75 points at 1,769.80, and rallied to the intra-day high of 1,776.11 within the first twenty minutes after opening. The key index slipped lower on heavy profit-taking activity to hit the intra-day low of 1,763.05 at late afternoon, but some last minutes buying on selected blue-chips managed to prop up the index to close off low. Chart-wise, the FBM KLCI formed a bearish black spinning-top candlestick which indicates indecision of market direction with a bearish bias. The filling of the upside gap also indicates an exhaustion of the upward move, and hence, the FBM KLCI is likely to correct or consolidate after a two-day strong upward move. Immediate overhead resistance zone is at 1,776 to 1,780, while the downside support zone is at 1,763 to 1,753.
MACD and its histogram continued to climb higher, indicating a continued increased in the bullish momentum. RSI (14) was higher at 58.5 from 57.5, indicating a mild increased in the short term relative strength which is now in a mildly bullish state. Stochastic was higher at 94 from 80.4, indicating a very strong market strength and continuation of the short term up cycle, but the key index has entered the short term overbought zone. Readings from the indicators showed that the FBM KLCI is mildly bullish but was slightly overbought, and a profit-taking pulled back might be expected soon.
The short term trend of the FBM KLCI is up as the key index is staying above all the short term moving averages, but the medium term trend might have turned sideways as the short term moving averages are still below the medium term moving averages. Nevertheless, the long term uptrend still remained intact. As the week is half gone, and Bursa Malaysia will be closed on coming Monday for Malaysia Day holiday, the market is likely to see more profit-taking activity and goes into a consolidation mode ahead of the long weekend.
Overnight, the Dow rose +135.54 points or +0.89% to close at 15,326.60. Today, the FBM KLCI is likely to trade within a range of 1,749 to 1,789.
This week's expected range: 1682 – 1795
Today’s expected range: 1749 – 1789
Resistance: 1775, 1782, 1789
Support: 1749, 1756, 1762
Stocks to watch: BRAHIMS, GPACKET, IRCB, IRCB-WA, NTPM, PESONA, SERSOL, SERSOL-WA, STEMLIFE