Stocks on Bursa Malaysia closed higher yesterday with the market barometer index finished higher despite the bearish overnight performance on Wall Street and mixed regional peers. The benchmark FBM KLCI added 6.58 points or 0.38% to close at 1,735.63 after hovering between 1,730.75 and 1,739.48 throughout the day. Market breadth was, however, negative with decliners outpacing gainers 417 to 357, while 336 counters were unchanged. Total volume shrank to 1.22 billion units worth RM1.55 billion from 1.33 billion units worth RM1.46 billion on Tuesday.
The FBM KLCI rebounded to open 1.89 points higher at 1,730.94 but slipped lower marginally to touch the intra-day low of 1,730.75 briefly after opening. The key index rebounded from the low and climbed higher gradually for the rest of the day. It hit the intra-day high of 1,739.48 at mid-afternoon before pulling back on mild profit taking to close off high. Chart-wise, the FBM KLI formed a white inverted hammer candlestick in bullish Harami position, in which both are bottom reversal patterns that indicate the appearance of bargain hunters after the FBM KLCI was beaten down for six consecutive weeks. Hence, the FBM KLCI is likely to stage further rebound today, and a confirmation of reversal will require the key index to close above the immediate resistance level of 1,739-point. Immediate overhead resistance zone is at 1,739 to 1,750, while the immediate downside support zone is at 1,730 to 1,727.
MACD hooked upward slightly, but its histogram further contracted upward strongly, indicating further reduction in the bearish momentum and a state of consolidation. RSI (14) hooked upward to 30.1 from 25.2, indicating a technical rebound which lifted the key index to the bearish zone from the very bearish zone. Stochastic was, however, lower at 9.6 from 10.7, indicating a state of consolidation. Readings from the indicators showed that the FBM KLCI is in a state of consolidation and is likely to stage further oversold rebound.
The trend of the FBM KLCI still remained down. Nonetheless, the price action of the FBM KLCI yesterday showed that the key index was hitting a temporary bottom and the candlestick formation indicated that the FBM KLCI might stage a technical rebound. However, a trend reversal will require the key index to at least closed above the upper resistance line of the downtrend channel currently at 1,755-point. On the broader market, sentiment remained cautious as can be seen from the very low trading volume which is typical for a market in consolidation.
Overnight, the Dow rebounded 236.36 points or 1.33% to close at 18,000.40. Today, the FBMKLCI is likely to trade within a range of 1,722 to 1,748.
This week's expected range: 1714 – 1771
Today’s expected range: 1722 – 1748
Resistance: 1739, 1744, 1748
Support: 1722, 1726, 1731
Stocks to watch: ASDION, BARAKAH, GESHEN, KOSSAN, MBMR, REXIT, SENDAI, TGOFFS, 3A, TOPGLOV, WELLCAL, XDL
Stock pick highlight: BARAKAH (7251)
Last Price: RM0.925 +0.03
Support Level: RM0.90, RM0.86
Resistance Level: RM0.93, RM0.945, RM0.96, RM0.98, RM1.00, RM1.04, RM1.07, RM1.10, RM1.13, RM1.17, RM1.20
Entry Level: RM0.92 – RM0.93
BARAKAH (7251) rebounded from its intra-day low of 0.90 to close higher at 0.925 after hitting the intra-day high of 0.93. Technically, the chart of BARAKAH 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 higher and crossed over the zero-line and is also 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 64.4 from 56.5, indicating the stock is turning bullish. Stochastic was higher at 92.4 from 82.6 and is above the slow stochastic line, indicating the stock is turning strong after recent consolidation. The medium and long term trend of BARAKAH is sideways, and the short term trend is turning 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 RM0.93 will see an upside target of RM0.945, follow by RM0.96, RM0.98, RM1.00, RM1.04, RM1.07, RM1.10, RM1.13, RM1.17 and RM1.20.
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 (RM0.93). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM0.945, RM0.96, RM0.98 RM1.00, RM1.04), stop loss (RM0.89)
Mid Term – target price at (RM1.07, RM1.10, RM1.13, RM1.17, RM1.20), stop loss (RM0.85)
Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. The Stocks to watch is not a recommendation to buy or sell the particular stock, as it is only meant for graduates of the "Share Trading the Pro Way" course as case study. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.