Stocks on Bursa Malaysia ended higher yesterday, lifted by gains in heavyweights, but late selling of KLK restrained its gains. The optimism which fuelled the market was a spillover effect from regional bourses, with China stocks nearing a seven-year high on hopes for more infrastructure spending and policy stimulus. The benchmark FBM KLCI rose 8.46 points or 0.47% to close at 1,821.83 points, after hovering between 1,815.02 and 1,825.76 throughout the day. Gainers edged losers 400 to 383 with 340 counters unchanged. Total volume fell to 1.92 billion units worth RM1.7 billion from Friday’s 1.64 billion units worth RM1.82 billion.
Taking cue from the rebound on Wall Street last Friday, the FBM KLCI opened 2.15 points higher at 1,815.52 but slipped lower to hit the intra-day low of 1,815.02 briefly after opening. The Key index rebounded from the low and climbed higher for the rest of the day to hit the intra-day high of 1,825.76 just before closing. However, late selling of selected blue-chips dragged the FBM KLCI to close off high. Chart-wise, the FBM KLCI formed a bullish white candlestick which reversed the pullback correction on last Thursday and Friday, forming a Flag pattern reversal. Hence, the FBM KLCI is likely to climb higher today on follow through buying momentum. Immediate overhead resistance zone is at 1,825 to 1,831, while the immediate downside support zone is at 1,815 to 1,813.
MACD rose higher and its histogram also extended higher after contracting for one bar, indicating an increased in the bullish momentum. RSI (14) hooked upward to 59.8 from 56.1, indicating the short term relative strength of the FBM KLCI is turning bullish from a mildly bullish state. Stochastic hooked upward slightly to 87.6 from 87.3, indicating a rebound and the short term cycle is still up. Readings from the indicators showed that the FBM KLCI rebounded after a two-day correction and the momentum is still bullish. Thus, is likely to move higher today.
The short and medium term trend of the FBM KLCI is up as the key index continued to stay above the short and medium term moving averages. The long term trend is sideways but with an upward as the key index is now closing above the 100, 120 and 150-day simple moving average (SMA) but is still capped on top by the 200, 240, 300 and 360-day SMA. The FBM KLCI pierced through the 200-day SMA, currently at 1,822.30, briefly yesterday but pullback to close below it, indicating the cluster of long term moving averages are posting strong resistance to the key index. Nonetheless, it is likely that the FBM KLCI may stage another test of the 200-day SMA resistance today, and a breakthrough will see the key index rallying higher to test the uppermost moving average resistance of 1,829.48 posted by the 240-day SMA. A successful breakthrough of the tough long term moving average barrier will see the FBM KLCI regaining its bullish posture and move towards the 1,845 to 1,858 zone with the possibility of re-testing the all-time high level of 1,896.23 in the medium to longer term.
Overnight, the Dow rose 263.65 points or 1.49% to close at 17,976.31. Today, the FBMKLCI is likely to trade within a range of 1,805 to 1,836.
This week's expected range: 1771 – 1850
Today’s expected range: 1805 – 1836
Resistance: 1826, 1831, 1836
Support: 1805, 1810, 1815
Stocks to watch: BJCORP, CAMRES, CAP, CONNECT, DOMINAN, EUROSP, HEVEA, HOMERIZ, JADI, LUXCHEM, MIECO, MMSV, PWROOT, PRIVA, SAPRES, SIGN, TAFI, VSOLAR, WINTONI, YEELEE
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