Stocks on Bursa Malaysia closed higher yesterday on bargain hunting in selected finance heavyweights. Window dressing activities in selected index-linked counters, especially finance, helped lift the FBM KLCI but further upside was capped by cautious sentiment amid weak regional stock markets, as Asian stocks took a breather following declines on Wall Street after a rise in US inflation. The FBM KLCI closed 5.06 points or 0.28% higher at 1,819.1, after moving between 1,812.18 and 1,823.19 throughout the day. Gainers led losers by 449 to 391 with 298 counters unchanged. Total volume rose to 2.03 billion units worth RM2.12 billion from 1.94 billion shares worth RM1.83 billion on Tuesday.
Taking cue from the weak performance on Wall Street overnight, the FBM KLCI opened 1.61 points lower at 1,812.43 and slipped lower to the intra-day low of 1,812.18 five minutes after opening. The key index rebounded from the low and rallied higher to hit the intra-day high of 1,823.19 at late morning. However, the rise could not sustain and profit-taking activity dragged the index lower to move sideways range-bound for the rest of the day. Chart-wise, the FBM KLCI formed a bullish white candlestick which continued the rise from Tuesday. However, the pullback consolidation in the second session showed that the market was cautious when it approached the overhead resistance zone of 1,820 to 1,830. Hence, the FBM KLCI is likely to consolidate its gain today after a two-day gain. Immediate overhead resistance zone is at 1,823 to 1,831, while the immediate downside support zone is at 1,812 to 1,795.
MACD climbed higher after making a golden-cross the day before, indicating further increased in momentum to the upside. RSI (14) was higher at 59.5 from 57.6, indicating an improvement of the index’s relative strength to the bullish side. Stochastic was higher at 72.6 from 60.9, indicating further improvement of the index’s strength and continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI is gradually gaining its strength, and hence, is likely to rise further.
The technical picture of the FBM KLCI remained much the same in that the short and medium term trend is up, while the long term trend is still sideways range-bound. Nonetheless, the bullish upward move over the last two sessions showed that the benchmark index is likely to move higher to challenge the immediate strong overhead moving average resistance zone of 1,823 to 1,830, in which the 1,823-point resistance is posted by the 200-day SMA, while the 1,830-point resistance is posted by the 240-day SMA. A breakthrough of this tough resistance zone will likely see the FBM KLCI rallying higher to the next resistance zone of 1,845 to 1,858. On the broader market, rotational play on small caps and ACE market counters still remained active.
Overnight, the Dow fell a hefty 292.60 points or -1.62% to close at 17,718.54. Today, the FBMKLCI is likely to trade within a range of 1,802 to 1,834.
This week's expected range: 1738 – 1857
Today’s expected range: 1802 – 1834
Resistance: 1824, 1829, 1834
Support: 1802, 1807, 1813
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