Stocks on Bursa Malaysia closed mixed yesterday with the benchmark FBM KLCI ended almost flat to close 0.92 point lower at 1,849.39 points after fluctuating between 1,843.99 and 1,849.77 throughout the day. Nonetheless, gains in small-capitalised stocks helped mitigate losses caused by selling in blue-chips, particularly in banking- and oil and gas-related stocks. Gainers thumped losers by 479 to 374, while 314 counters were unchanged. Total volume fell to 1.8 billion units worth RM1.79 billion from Wednesday’s 1.82 billion units worth RM1.88 billion.
Continuing the correction on Wednesday, the FBM KLCI opened 1.88 points lower at 1,848.43 but rebounded to hit the intra-day high of 1,849.77 thirty minutes after opening. However, persistent selling in blue-chips continued to drag the key index lower to hit the intra-day low of 1,843.99 just before closing. However, a last minute buying on selected blue-chips lifted the FBM KLCI to close slightly below the high of the day. Chart-wise, the FBM KLCI formed a bullish white hammer candlestick, a bottom reversal candlestick pattern which indicates the bears were in control initially but the bulls fought back towards the end. Hence, the FBM KLCI is likely to stage a rebound today. Immediate overhead resistance zone is at 1,850 to 1,856, while the downside support zone is at 1,843 to 1,837.
MACD was higher but its histogram contracted for a second bar, indicating a state of consolidation. RSI (14) was marginally lower at 66.3 from 66.9, indicating a mild correction and the short term relative strength of the FBM KLCI is still in the bullish zone. Stochastic was lower at 92.7 from 95.5 and is below the slow stochastic line, indicating continuation of the correction. Readings from the indicators showed that the FBM KLCI is undergoing a mild correction and is likely to continue the uptrend after the correction is over.
The FBM KLCI has corrected for a second day after the recent rise. Nonetheless, the correction is healthy after the recent gains to neutralize the overbought situation, and the FBM KLCI is likely to continue its uptrend after the correction as the trend of the key index is still up and bullish. On the broader market, trading momentum has reduced slightly as the volume continued to shrink, but rotational play on small caps and ACE market counters still continues.
Overnight, the Dow rose 56.22 points or 0.31% to close at 17,958.73. Today, the FBMKLCI is likely to trade within a range of 1,839 to 1,855.
This week's expected range: 1798 – 1858
Today’s expected range: 1839 – 1855
Resistance: 1851, 1853, 1855
Support: 1839, 1841, 1845
Stocks to watch: BRIGHT, CAB, CAREPLS, COMPLET, ECS, FABER, FITTERS, FRONTKN, GOB, HEVEA, HWGB, HSL, INSAS, IPMUDA, KHEESAN, KKB, L&G, LNGRES, MALTON, MINHO, PMETAL, POHKONG, SCNWOLF, SEAL, SHH, SUNZEN, UZMA, WCT
Stock pick highlight: SUNZEN (0148)
Last Price: RM0.55 +0.02
Support Level: RM0.53, RM0.505
Resistance Level: RM0.56, RM0.585, RM0.60, RM0.625, RM0.65, RM0.675, RM0.70, RM0.75, RM0.80
Entry Level: RM0.55 – RM0.56
SUNZEN (0148) rebounded from its intra-day low of 0.53 to close higher at 0.55 after hitting the intra-day high of 0.56. Technically, the chart of SUNZEN formed a bullish white candlestick with increasing volume, indicating strong buying interest came into the stock yesterday. It breaks out from the consolidation range forming a Rectangle pattern breakout. MACD surged upward and its histogram also extended upward, indicating an increased in momentum to the upside and a buy signal. RSI (14) rose to 69.3 from 62, indicating the stock is turning very bullish. Stochastic rose to 82.3 from 76.7 and is above the slow stochastic line, indicating the stock is turning strong after recent consolidation. The medium and long term trend of SUNZEN is is up, and the short term trend is up with the 5-day SMA above the 10-day SMA and is also above the 30-day SMA, and a confirmed breakout above RM0.56 will see an upside target of RM0.585, follow by RM0.60, RM0.625, RM0.65, RM0.675, RM0.70, RM0.75 and RM0.80.
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 (RM0.56). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM0.585, RM0.60, RM0.625, RM0.65), stop loss (RM0.525)
Mid Term – target price at (RM0.675, RM0.70, RM0.75, RM0.80), stop loss (RM0.495)
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