Stocks on Bursa Malaysia ended higher yesterday on better sentiment due to the Fitch Ratings’ decision to upgrade the country’s credit rating from negative to stable. However, the market was still nervous over the Greece’s debt crisis which was unlikely to be resolved before Sunday’s referendum. The FBM KLCI finished at 1,733.88, up by 5.92 points, or 0.34%, after moving between 1,728.43 and 1,738.67 throughout the day. Gainers thumped losers by 388 to 351, with 334 counters unchanged. Total volume dropped to 1.46 billion units worth RM1.85 billion from Wednesday’s 1.94 billion units worth RM2.17 billion.
Continuing the bullish momentum from Wednesday, the FBM KLCI opened 1.6 points higher yesterday at 1,729.56 and moved range-bound on cautious trading. The key index hit the intra-day low of 1,728.43 forty minutes after opening before rebounding to rally higher for the rest of the day. It touched an intra-day high of 1,738.67 just before closing. However, a last minute sell down on selected blue-chips dragged the FBM KLCI to close off high. Chart-wise, the FBM KLCI formed a white shooting-star-like candlestick, a potential top reversal candlestick pattern, which indicates late profit taking activity after initial pushed up by the bulls. Hence, the FBM KLCI is likely to consolidate today on continued profit taking activity. Immediate downside support zone is at 1,728 to 1,718, while the overhead resistance zone is at 1,738 to 1,745.
MACD continued to climb higher but is still below the zero-line, and its histogram also extended higher, indicating an increased in momentum to the upside. RSI (14) was higher at 48.7 from 46.1, indicating a further improvement in the index’s relative strength to the bullish side in the mildly bullish zone. Stochastic surged higher to 64.8 from 37, indicating further strengthening of the key index after recent correction. Readings from the indicators showed that the FBM KLCI rebounded strongly after recent correction. However, MACD and RSI showed that it is still in the bearish zone, and more upward move is required to turn the key index bullish.
The short term trend of the FBM KLCI has turned up as the key index has closed above the short term 5, 10, 15, and 20-day simple moving averages (SMA). However, the bullish upward move was met with strong resistance at the 30-day SMA as the key index staged a pullback after piercing through it, indicating selling pressure at level above the 30-day SMA, and hence, the FBM KLCI may consolidate first before making another test to break through the immediate resistance posted by the 30-day SMA. The medium and long term trend of the FBM KLCI is, however, still down, and to reverse the longer term downtrend will require the FBM KLCI to close above the cluster of medium and long term moving averages with the uppermost resistance at 1,820-point level posted by the 300 and 360-day SMA.
Overnight, the Dow fell 27.80 points or -0.16% to close at 17,730.11. Today, the FBMKLCI is likely to trade within a range of 1,718 to 1,748.
This week's expected range: 1675 – 1761
Today’s expected range: 1718 – 1748
Resistance: 1738, 1743, 1748
Support: 1718, 1723, 1728
Stocks to watch: CENBOND, DSONIC, EKA, ENGTEX, EVERGRN, FRONTKN, GKENT, HHGROUP, HOMERIZ, ILB, IOICORP, JERASIA, KIMHIN, LONBISC, PENTA, PPHB, SENDAI, TAKAFUL
Stock pick highlight: GKENT (3204)
Last Price: RM1.38 +0.06
Support Level: RM1.31, RM1.20
Resistance Level: RM1.40, RM1.44, RM1.47, RM1.51, RM1.56, RM1.61, RM1.65, RM1.69, RM1.73, RM1.80, RM1.95, RM2.04
Entry Level: RM1.37 – RM1.39
GKENT (3204) rebounded from its intra-day low of 1.32 to close higher at 1.38 after hitting the intra-day high of 1.40. Technically, the chart of GKENT formed a bullish white candlestick with a runaway gap, with increasing volume indicating strong buying interest came into the stock yesterday. It continued the upward move from the previous candlestick forming a Cup-with-Handle-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 77.6 from 72, indicating the stock is turning very bullish. Stochastic swung upward to 91.2 from 87.5 and is staying above the slow stochastic line, indicating the stock is getting stronger after recent correction. The long term trend of GKENT 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 both are above the 30-day SMA, and a confirmed breakout above RM1.40 will see an upside target of RM1.44, follow by RM1.47, RM1.51, RM1.56, RM1.61, RM1.69, RM1.73, RM1.80, RM1.95, and RM2.04.
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 (RM1.40). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM1.44, RM1.47, RM1.51 RM1.56, RM1.61), stop loss (RM1.30)
Mid Term – target price at (RM1.65, RM1.69, RM1.73, RM1.80, RM1.95, RM2.04), stop loss (RM1.19)
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