Stocks on Bursa Malaysia finished on a firm note yesterday on strong trading in selected heavyweights and blue-chips but the broader market showed signs of weakness. The local market and its regional peers were cautious ahead of the US Federal Reserve’s decision on interest rate. At close, the FBM KLCI ended 9.7 points or 0.54% better at 1,797.57, after moving between 1,787.77 and 1,800.83 throughout the day. Losers outnumbered gainers by 533 to 303 with 288 counters unchanged. Total volume decreased to 2.13 billion shares worth RM1.87 from 2.49 billion shares worth RM1.84 billion on Tuesday.
Continuing the bullish move on Tuesday, the FBM KLCI opened 2.45 points higher at 1,790.32 but slipped lower on profit-taking to hit the intra-day low of 1,787.77 forty minutes after opening. The key index rebounded and moved in a tight range for most part of the morning, but staged a breakout near noon and rallied to hit the intra-day high of 1,800.83 in the first fifteen minutes of the afternoon session. However, profit-taking activity sets in which dragged the index to close off high. Chart-wise, the FBM KLCI formed a bullish white candlestick which continued the bullish upward move on Tuesday, and hence, the FBM KLCI is likely to move higher today on follow through buying momentum. Immediate overhead resistance zone is at 1,800 to 1,810, while the immediate downside support zone is at 1,787 to 1,780.
MACD turned upward, and its histogram also contracted upward for the third bar, indicating continued reduction in the bearish momentum. RSI (14) was higher at 51.1 from 45.7, indicating an improvement in the short term relative strength to the neutral level from a mildly bearish state. Stochastic rose sharply to 27.7 from 17.2 and made a golden-cross over the slow stochastic line, issuing a stochastic buy signal, and indicated a possible end of the short term down cycle and the beginning of an up cycle. Readings from the indicators showed that the FBM KLCI is gradually moving out from its consolidation and gaining its upward momentum, and hence, is likely to move higher.
The very short term trend of the FBM KLCI has turned up as the key index has closed above the 5 and 10-day simple moving average (SMA) yesterday. However, the FBM KLCI met resistance at the 15-day SMA resistance at 1,800 as it pulled back after hitting it. Immediate short term moving average resistance zone is at 1,800 to 1,803 posted by the 15, 20 and 30-day SMA, and a breakthrough of this short term SMA resistance zone will see the FBM KLCI regaining its short term bullishness and rally towards the 1,810 to 1,831 resistance zone. On the broader market, the second and third liners were undergoing corrections after recent gains, and rotational play on different sets of counters is likely to continue.
Overnight, the Dow rose 227.11 points or 1.27% to close at 18,076.19. Today, the FBMKLCI is likely to trade within a range of 1,776 to 1,813.
This week's expected range: 1747 – 1823
Today’s expected range: 1776 – 1813
Resistance: 1803, 1808, 1813
Support: 1776, 1782, 1789
Stocks to watch: CIHLDG, FARMBES, GHLSYS, GTRONIC, HAPSENG, HSL, HUNZPTY, JOBST, MAGNI, MUDA, NICE, POS, TOPGLOV, YFG
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