Stocks on Bursa Malaysia staged a rebound on bargain hunting yesterday after two consecutive days of losses, in line with the rebound in most regional bourses even though Wall Street fall last night. The upbeat sentiment regionally was supported by a positive signal for the third round of quantitative easing. The FBM KLCI closed 10.24 points or 0.7% higher at 1,464.61 after opening 3.68 points steadier at 1,458.05. Gainers thumped losers by 439 to 240 while 251 counters were unchanged. A total of 650.39 million shares worth RM1.253 billion changed hands compared with 706.7 million shares worth RM1.517 billion on Tuesday.
The FBM KLCI opened 3.68 points higher at 1,458.05 and surged to the morning session high of 1,462.62, profit-taking activity which appeared pressed the key index to the intra-day low of 1,457.68. Bargain hunting activity appeared in the afternoon pushed the key index to the intra-day high of 1,465.01 before settling at 1,464.61. Chart-wise, the FBM KLCI formed a bullish white candlestick which indicates buyers were in control for the day. As the key index opened higher and moved higher to close the downside gap formed two days ago, it indicates a strong reversal in action, and the key index is likely to continue moving higher. Immediate overhead resistance zone is at 1,470 to 1,490 with 1,474 being the key resistance level.
MACD has turned up and made a golden-cross over the signal line, sending out buy signal. RSI (14) has hooked up to 39.9, reflecting the rebound, but is till in the bearish zone. Stochastic, however, has hooked downward to 27.2, indicating the down cycle is still in action. Readings from the indicators showed that the FBM KLCI might stage a follow through rebound with the appearance of the golden-cross signal on MACD.
The main trend of the FBM KLCI remained down. Nonetheless, some positive bottom reversal signs were observed, with first, the key index was able to reversed up to close above the 5, 10 and 360-day moving averages, and second, the MACD had made a golden-cross after a long period of correction. This indicates the FBM KLCI is ready for a rally towards the 1,500-points level, with the main hurdles at 1,474 and 1,490.
Overnight, the Dow rose +275.56 points or +2.47% to close at 11,414.86. Today, the FBM KLCI is likely to trade within a range of 1,452 to 1,474.
This week's expected range: 1414 – 1521
Today’s expected range: 1452 – 1474
Resistance: 1468, 1470, 1474
Support: 1452, 1455, 1459