Stocks on Bursa Malaysia closed higher yesterday after the US Federal Reserve unexpectedly announced its decision not to scale back its stimulus program until the economy improves further. The market tracked regional sentiment as investors cheered the news which assured that fund flows into the emerging markets would continue in the short-term. The FBM KLCI jumped 21.51 points or 1.21% to 1,792.91 after hovering between 1,787.38 and 1793.94 throughout the day. Gainers thrashed losers by 701 to 162, with 247 counters unchanged. Turnover rose to 1.94 billion shares, worth RM2.73 billion, from Wednesday's 1.43 billion shares worth RM1.48 billion.
Taking cue of the strong performance of Wall Street overnight, the FBM KLCI opened higher with a big upside gap of 19.01 points at 1,790.41. It slipped lower on profit-taking to the intra-day low of 1,787.38 at mid morning. The key index rebounded and moved in a tight range where it touched an intra-day high of 1,793.94 before pulling back to close off high. Chart-wise, the FBM KLCI formed a white spinning-top candlestick which indicates uncertainty or indecision of market direction but with an upward bias. The huge breakaway gap that formed yesterday indicates the euphoria of the market at the opening but sentiment turned cautious after that as the key index starts to move in a tight range. On the flipside, the gap will become an exhaustion gap if it is closed immediately. Immediate overhead resistance zone is at 1,793 to 1,801 while the immediate downside support is at 1,787.
MACD continued to rise and its histogram extended upward, indicating a pickup in the upward momentum. RSI (14) was higher at 65.4 from 58.5, indicating the key index has turned short term bullish. Stochastic hooked upward to 94.3 from 92.5, indicating a pickup in the market strength and continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI has turned bullish for the short term and is likely to move higher.
The trend of the FBM KLCI is up and bullish as the key index is staying above all the short, medium and long term moving averages. However, as of now, only the 5-day SMA has closed above the 60-day SMA, while other short term moving averages is still below the 60-day SMA, the medium term trend might still be sideways until a firm breakout of the FBM KLCI above the 1,811 level is seen. The long term trend is still up.
Overnight, the Dow fell 40.39 points or -0.26% to close at 15,636.55. Today, the FBM KLCI is likely to trade within a range of 1,782 to 1,800.
This week's expected range: 1705 – 1811
Today’s expected range: 1782 – 1800
Resistance: 1795, 1798, 1800
Support: 1782, 1784, 1788
Stocks to watch: ALAM, GUNUNG, HOVID, HIBISCS, HIBISCS-WA, KARYON, LBS, LBS-WA, MMODE, MUHIBAH