Stocks on Bursa Malaysia closed on a firm note in buoyant trading yesterday with the benchmark index surging higher as the market reacted positively to the “stable” outlook status accorded by Fitch Ratings on the Malaysian economy. The US-based ratings agency affirmed Malaysia’s long-term foreign currency rating at “A-” and revised upwards its outlook to “stable” from “negative”. At close, the FBM KLCI stood at 1,727.96, up by 21.32 points, or 1.25%, after moving between 1,709.77 and 1,737.67 throughout the day. Market breadth was positive with gainers thumping losers by 678 to 192, with 251 counters unchanged. Total volume firmed to 1.94 billion units worth RM2.17 billion from Tuesday’s 1.75 billion units worth RM2.25 billion.
Following the overnight Fitch Ratings’ revise announcement, the FBM KLCI opened 3.13 points higher with an upside gap at 1,709.77, the intra-day low, and rallied higher to touch the intra-day high of 1,737.67 near noon. The key index pulled back on profit taking activity in the afternoon session to give back almost 10-points of its earlier gains. Chart-wise, the FBM KLCI formed a bullish white candlestick which indicates continuation of the rebound from the previous day, and the bulls or buyers were in control for the day. Hence, the FBM KLCI is likely to continue its upward move to climb higher today. Immediate overhead resistance zone is at 1,737 to 1,744, while the downside support zone is at 1,709 to 1,700.
MACD surged upward, and its histogram also extended upward strongly, indicating a strong increase in the upward momentum. RSI (14) surged to 46.1 from 35.4, indicating a change of the index’s relative strength from bearish to a mildly bearish state. Stochastic surged higher to 37 from 15.1, indicating an improvement in the index’s strength and the short term up cycle has turned from down to up. Readings from the indicators showed that the FBM KLCI is experiencing a drastic change in momentum to the upside. However, as the overall technical readings are still bearish, the positive readings may turn out to be just a technical rebound in a still bearish market.
The general trend of the FBM KLCI is still down. However, with the strong rebound over the last two days, the short term trend of the FBM KLCI has turned from down to up as the key index has closed above the 5, 10, 15 and 20-day simple moving average (SMA). Nevertheless, the FBM KLCI made a strong pullback after hitting into the 30-day SMA at 1,737, indicating short term profit taking activity may cap the upside. And, only if the FBM KLCI is able to break through the overhead resistance posted by the 30-day SMA, the key index may rally higher towards the 1,750-point level. To fully reverse the longer term downtrend the FBM KLCI will have to close above the cluster of short, medium and long term moving averages with the highest resistance level at 1,820-point by the 360-day SMA.
Overnight, the Dow rose 138.40 points or 0.79% to close at 17,757.91. Today, the FBMKLCI is likely to trade within a range of 1,684 to 1,765.
This week's expected range: 1675 – 1761
Today’s expected range: 1684 – 1765
Resistance: 1740, 1753, 1765
Support: 1684, 1697, 1712
Stocks to watch: ASIAPLY, CAREPLS, COMCORP, EVERGRN, GDEX, HANDAL, HIBISCS, IDMENSN, JAKS, JIANKUN, LCTH, MUHIBAH, MYEG, PENTA, PRESBHD, PPHB, SENDAI, SKPRES, SLP, TAKAFUL, WASEONG
Stock pick highlight: WASEONG (5142)
Last Price: RM1.43 +0.05
Support Level: RM1.39, RM1.31
Resistance Level: RM1.45, RM1.48, RM1.51, RM1.56, RM1.59, RM1.63, RM1.67, RM1.71, RM1.76, RM1.78, RM1.84
Entry Level: RM1.42 – RM1.44
WASEONG (5142) rebounded from its intra-day low of 1.39 to close higher at 1.43 after hitting the intra-day high of 1.44. Technically, the chart of WASEONG formed a bullish white candlestick with a breakaway gap, with increasing volume indicating strong buying interest came into the stock yesterday. It continued the rebound from the previous candlestick forming a Double bottom W-pattern breakout. MACD surged higher and is above the signal-line and also the zero-line and its histogram also extended upward strongly, indicating an increased in momentum to the upside and a buy signal. RSI (14) rose to 65.2 from 58.3, indicating the stock is turning bullish. Stochastic was higher at 75 from 52.2 and is staying above the slow stochastic line, indicating the stock is getting stronger after recent correction. The long term trend of WASEONG is sideways to up, while the medium term trend is up, and the short term trend is also up with the 5-day SMA staying above the 10-day SMA and 30-day SMA, and a confirmed breakout above RM1.45 will see an upside target of RM1.48, follow by RM1.51, RM1.56, RM1.59, RM1.63, RM1.67, RM1.71, RM1.76, RM1.78, and RM1.84.
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 (RM1.45). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM1.48, RM1.51, RM1.56 RM1.59, RM1.63), stop loss (RM1.38)
Mid Term – target price at (RM1.67, RM1.71, RM1.76, RM1.78, RM1.84), stop loss (RM1.29)
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