FBM KLCI - 20150416Stocks on Bursa Malaysia closed higher yesterday with the benchmark FBM KLCI closing 7.81 points, or 0.42%, better at 1,847.94 on late buying by foreign fund while the broader market was also firmer in line with the key regional bourses. Gainers overwhelmed losers by 517 to 340, with 357 counters unchanged. Total volume stood at 2.7 billion shares worth RM2.52 billion, matching Wednesday’s 2.7 billion shares worth RM2.51 billion.

Taking cue from the rebound on Wall Street overnight, the FBM KLCI opened 1.91 points higher at 1,842.04 and rallied higher to hit the intra-day high of 1,849.22 in the first fifty minutes after opening. However, the rise could not sustain and the key index pulled back on heavy profit taking for the rest of the day to hit the intra-day low of 1,838.27, but a last minute buying of selected blue-chips lifted the FBM KLCI to close near the high of the day. Chart-wise, the FBM KLCI formed a bullish white candlestick which confirmed the reversal signal generated by the white inverted hammer candlestick on Wednesday. Hence, the FBM KLCI is likely to climb higher today on follow through buying momentum. Immediate overhead resistance zone is at 1,849 to 1,856, while the immediate downside support zone is at 1,837 to 1,831.

MACD turned flat and is staying just slightly above the signal line, and its histogram was just marginally shorter, indicating a state of consolidation and a reduction in the bearish momentum to a neutral state. RSI (14) turned upward to 63.5 from 59.6, indicating a swing in the relative strength from mildly bullish to a bullish state. Stochastic hooked upward to 67.3 from 63.5 but is still below the slow stochastic line, indicating a technical rebound. Readings from the indicators showed that the FBM KLCI was staging a technical rebound after six consecutive sessions of retreat, and is likely to rise further on follow through buying momentum.

With the strong rebound yesterday, the FBM KLCI has again closed above the 5 and 10-day simple moving average (SMA) after closing below them briefly, reversing the near term trend from down to up and indicated that the recent correction is over and the key index is likely to move higher to challenge the overhead resistance zone of 1,856 to 1,879 in the short term. A successful breakthrough will see the FBM KLCI climbing higher to test the all-time high level of 1,896.23. On the broader market, active rotational play on small caps and ACE market counters continued to keep the market alive with good trading opportunities.

Overnight, the Dow fell 6.84 points or -0.04% to close at 18,105.77. Today, the FBMKLCI is likely to trade within a range of 1,830 to 1,860.

This week's expected range: 1816 – 1875
Today’s expected range: 1830 – 1860

Resistance: 1852, 1856, 1860
Support: 1830, 1834, 1841



Stock pick highlight: SCH (0161)

20150416 - SCH

Last Price: RM0.305 +0.01
Support Level: RM0.295, RM0.275
Resistance Level: RM0.31, RM0.325, RM0.335, RM0.35, RM0.37, RM0.385, RM0.40, RM0.425, RM0.45
Entry Level: RM0.305 – RM0.31

Technical Analysis

SCH (0161) rebounded from its intra-day low of 0.295 to close higher at 0.305 after hitting the intra-day high of 0.31. Technically, the chart of SCH 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 climbed upward and is above the signal-line, and its histogram also extended upward, indicating an increased in momentum to the upside and a buy signal. RSI (14) rose to 66.7 from 62.1, indicating the stock is turning more bullish. Stochastic rose to 80.8 from 76.9, indicating the stock is turning stronger after recent consolidation. The long term trend of SCH is sideways while the medium term trend has turned up, and the short term trend is up with the 5-day SMA closing above the 10-day SMA and is also above the 30-day SMA, and a confirmed breakout above RM0.31 will see an upside target of RM0.325, follow by RM0.335, RM0.35, RM0.37, RM0.385, RM0.40, RM0.425 and RM0.45.

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 (RM0.31). Those with lower risk appetite should wait at the side-line and buy on the dip.

Price Objective
Short Term – target price at (RM0.325, RM0.335, RM0.35, RM0.37), stop loss (RM0.29)
Mid Term – target price at (RM0.385, RM0.40, RM0.425, RM0.45), stop loss (RM0.27)

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SCH (0161)