Stocks on Bursa Malaysia ended sharply higher yesterday, boosted by strong gains in telco heavyweights on market talk on the introduction of fifth-generation wireless technology, and a last-minute buying of index-linked telco stocks pushed the benchmark index to close at the highest point of the day. Of the telco heavyweights, Axiata soared 48 sen to RM6.85, DiGi rose 10 sen to RM5.50, and Maxis climbed 53 sen to RM7.20. The FBM KLCI rose 21.05 points or 1.22% to close at 1,744.19, after fluctuating between 1,714.82 and 1,744.19 throughout the day. Losers led gainers by 465 to 324 with 333 counters unchanged. Total volume rose to 1.32 billion units valued at RM1.25 billion from 1.68 billion units valued at RM2.01 billion on last Friday.
Taking cue from the weak performance on Wall Street last Friday, the FBM KLCI opened 6.15 points lower at 1,716.99 and slipped lower to hit the intra-day low of 1,714.19 ten minutes after opening. The key index rebounded from the day’s low and climbed higher gradually within a narrow range in the negative territory for the rest of the day, and a last minute buying on telco stocks sent the FBM KLCI to the highest point of the day. Chart-wise, the FBM KLCI formed a bullish long white candlestick which indicates the bulls or buyers were in strong control for the day, and hence, the FBM KLCI is likely to continue its upward momentum to move higher today. However, the strong gains of forty over points in two days would likely attract profit taking activity. Immediate overhead resistance zone is at 1,750 to 1,759, while the immediate downside support zone is at 1,738 to 1,730.
MACD surged higher, and its histogram also extended higher, indicating a strong increased in momentum to the upside. RSI (14) rose to 59.6 from 51.3, indicating a change in the index’s relative strength to a bullish state from a mildly bullish state. Stochastic surged higher to 61.9 from 34.6 and made a golden-cross over the slow stochastic line, issuing a bullish stochastic buy signal, and indicated the beginning of a short term up cycle. Readings from the indicators showed that the FBM KLCI has turned bullish for the short term, and hence is likely to move higher.
The short term trend of the FBM KLCI has turned up as a result of the strong move yesterday which saw the key index breaking out from the overhead resistance of 1,738 of the sideways range, and the breakout also saw the key index breaking the neckline of the Inverse Head-and-Shoulder chart pattern, indicating the beginning of a short term uptrend with a potential upside target of 1,788 to 1,800. The FBM KLCI has also closed above the medium term 50 and 60-day simple moving averages (SMA), indicating the medium term trend is also starting to turn bullish. Nevertheless, the long term trend of the FBM KLCI is still down with the 100 and 120-day SMA posting resistance at 1,775 to 1,780, and the highest level long term resistance is at 1,815 posted by the 360-day SMA.
Overnight, the Dow fell 91.66 points or -0.52% to close at 17,598.20. Today, the FBMKLCI is likely to trade within a range of 1,695 to 1,773.
This week's expected range: 1677 – 1750
Today’s expected range: 1695 – 1773
Resistance: 1753, 1763, 1773
Support: 1695, 1705, 1724
Stocks to watch: ASIAPAC, BENALEC, BORNOIL, BPPLAS, CAREPLS, CENBOND, CENTURY, DOMINAN, GLBHD, GUOCO, HIBISCS, IMASPRO, JCY, KBES, KTB, LANDMRK, LUXCHEM, MINHO, NIHSIN, OCNCASH, PANPAGE, SOLUTN, XIANLNG
Stock pick highlight: MINHO (5576)
Last Price: RM1.83 +0.12
Support Level: RM1.72, RM1.67
Resistance Level: RM1.88, RM1.92, RM1.98, RM2.05, RM2.12, RM2.15, RM2.18, RM2.22, RM2.30, RM2.40, RM2.55
Entry Level: RM1.82 – RM1.85
MINHO (5576) rebounded from its intra-day low of 1.72 to close higher at 1.83 after hitting the intra-day high of 1.88. Technically, the chart of MINHO formed a bullish long white candlestick with increasing volume indicating strong buying interest came into the stock yesterday. It breaks out from the consolidation forming a Pennant pattern breakout. MACD turned flat and is below the signal-line, but its histogram contracted upward, indicating a changed in momentum to the upside and a buy signal. RSI (14) rose to 68.9 from 63.1, indicating the stock is turning more bullish. Stochastic hooked upward to 63.9 from 62.5 and is still below the slow stochastic line, indicating a technical rebound. The medium and long term trend of MINHO is up, and the short term trend is also up with the 5-day SMA still staying below the 10-day SMA but both are above the 30-day SMA, and a confirmed breakout above RM1.88 will see an upside target of RM1.92, follow by RM1.98, RM2.05, RM2.12, RM2.15, RM2.18, RM2.22, RM2.30, RM2.40, and RM2.55.
Since the short term trend is bullish, day traders with shorter time frame perspective may ride on the short term bullishness and buy on breakout level (RM1.88). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM1.92, RM1.98, RM2.05, RM2.12, RM2.15), stop loss (RM1.71)
Mid Term – target price at (RM2.18, RM2.22, RM2.30, RM2.40, RM2.55), stop loss (RM1.66)
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