Stocks on Bursa Malaysia bucked regional trends to close higher yesterday lifted by gains in selected plantation heavyweight counters, as well as Petronas Chemicals and Tenaga Nasional Berhad. The local stock market remained resilient despite the weaker regional markets which drifted after weak US retail sales figures suggested the world’s largest economy is struggling to maintain growth momentum. At close, the benchmark FBM KLCI rose 4.53 points or 0.25% to 1,807.55, after hovering between 1,803.63 and 1,807.9 throughout the day. Gainers led losers 411 to 355, with 359 counters unchanged. Total volume declined to 1.57 billion units worth RM1.79 billion from Wednesday’s 1.68 billion units worth RM2 billion.
The FBM KLCI opened 3.1 points higher with an upside gap at 1,806.12 and surged to hit the intra-day high of 1,807.90 ten minutes after opening. However, profit taking activity dragged the FBM KLCI lower to hit the intra-day low of 1,803.63 at late morning, and the key index rebounded to move sideways range-bound for the rest of the day. Chart-wise, the FBM KLCI formed a small white hammer-like candlestick which indicates continuation of the rebound, confirming the bottom reversal signal issued by the white hammer candlestick on Wednesday. Hence, the FBM KLCI is likely to continue its upward momentum to move higher today. Immediate overhead resistance zone is at 1,814 to 1,818, while the downside support zone is at 1,803 to 1,795.
MACD was marginally lower, but its histogram contracted upward for a second bar, indicating a further reduction in the bearish momentum. RSI (14) was higher at 40.8 from 38.1, indicating continuation of the rebound from Wednesday, and the relative strength of the FBM KLCI has improved slightly from bearish to mildly bearish. Stochastic risen to 10.1 from 5.5 after making a golden-cross on Wednesday, indicating continuation of the upward move and the possible beginning of a short term up cycle. Readings from the indicators showed that the FBM KLCI has rebounded after hitting the deeply oversold zone on the stochastic scale, and is likely to move higher.
The short and medium trend of the FBM KLCI is still down. However, with the rebound yesterday, the FBM KLCI has closed above the 5-day simple moving average (SMA), issuing an early sign that the short term trend is reversing from down to up. Nonetheless, it is still too early to make any conclusion of trend reversal, as for the trend to reverse up the key index will have to close above the highest moving average resistance by the 30-day SMA currently at 1,835. On the broader market, trading activity in small caps and ACE market counters still remain sluggish as shown by the low trading volume.
Overnight, the Dow rose 191.75 points or 1.06% to close at 18,252.24. Today, the FBMKLCI is likely to trade within a range of 1,800 to 1,812.
This week's expected range: 1772 – 1856
Today’s expected range: 1800 – 1812
Resistance: 1809, 1810, 1812
Support: 1800, 1802, 1804
Stocks to watch: CIHLDG, CLIQ, EWEIN, HHGROUP, KESM, LFECORP, LIONDIV, OWG, PENTA, PERWAJA, SAUDEE, SCC, SIGN, SMTRACK, SUIWAH, YTLPOWR
Stock pick highlight: LFECORP (7170)
Last Price: RM0.26 +0.02
Support Level: RM0.235, RM0.21
Resistance Level: RM0.265, RM0.285, RM0.30, RM0.31, RM0.325, RM0.37, RM0. 385, RM0.41, RM0.435, RM0.47, RM0.50
Entry Level: RM0.255 – RM0.265
LFECORP (7170) rebounded from its intra-day low of 0.235 to close higher at 0.26 after hitting the intra-day high of 0.265. Technically, the chart of LFECORP formed a bullish white candlestick with increasing volume indicating strong buying interest came into the stock yesterday. It reversed up from the pullback correction forming a Flag 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 72.1 from 67.7, indicating the stock is turning very bullish. Stochastic hooked upward to 68 from 66.7 but is still below the slow stochastic line, indicating a technical rebound. The medium and long term trend of LFECORP is up, and the short term trend is also up with the 5-day SMA staying above the 10-day SMA and both are above the 30-day SMA, and a confirmed breakout above RM0.265 will see an upside target of RM0.285, follow by RM0.30, RM0.31, RM0.325, RM0.37, RM0.385, RM0.41, RM0.435, and RM0.47.
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 (RM0.265). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM0.285, RM0.30, RM0.31, RM0.325, RM0.37), stop loss (RM0.23)
Mid Term – target price at (RM0.385, RM0.41, RM0.435, RM0.47, RM0.50), stop loss (RM0.205)
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