Stocks on Bursa Malaysia closed mixed yesterday with the benchmark index reversing its earlier trend to close marginally higher on last-minute buying support for heavyweights. Sentiment turned positive after euro zone leaders agreed to a deal that would pave for negotiations for a third bailout for Greece, in which the deal will allow Greece to stay in euro zone and avoid bankruptcy, but it will have to undertake reforms and privatise assets worth about 50 billion euro (RM211.18 billion). The FBM KLCI finished at 1,716.11, up 0.53 point, or 0.03%, after moving between 1,707 and 1,718.39 throughout the day. Losers edged gainers by 359 to 357, while 322 counters were unchanged. Total volume fell to 1.49 million units valued at RM1.45 billion from 1.67 billion units valued at RM1.66 billion, recorded on last Friday.
Following the brawls that happened in Plaza Low Yat area, Kuala Lumpur over the weekend, the FBM KLCI opened 4.83 points lower at 1,710.75 and slipped lower to hit the intra-day low of 1,707 fifty minutes later. The key index rebounded from the low and climbed higher gradually for the rest of the day to touch the intra-day high of 1,718.39 before pulling back slightly to close off high. Chart-wise, the FBM KLCI formed a white spinning-top candlestick which indicates uncertainty of market direction with a bullish bias. Hence, the FBM KLCI is likely to move higher today on follow through buying. Immediate overhead resistance zone is at 1,718 to 1,728, while the downside support zone is at 1,707 to 1,700.
MACD and its histogram were higher, indicating an increased in momentum to the upside. RSI (14) was higher at 45.1 from 44.99, indicating a mild improvement in the relative strength. Stochastic was higher at 48.6 from 34.6, and made a golden-cross over the slow stochastic line, issuing a stochastic buy signal and indicated a strengthening of the key index. On top of that, all three momentum indicators formed bullish divergences with the key index, indicating a bullish upward move is imminent.
The general trend of the FBM KLCI is still down. Nonetheless, with the rebound over the last three sessions, the FBM KLCI has turned sideways range-bound for the near term as the key index is now closing above the 5, 10 and 15-day simple moving averages (SMA) but is still below the 20 and 30-day SMA that are currently posting resistance at 1,718 and 1,724. A break through of the short term overhead resistance zone of 1,718 to 1,724 will see the FBM LCI rallying higher to test the next higher resistance zone of 1,728 to 1,738. The resistance at 1,738 is an important level for the FBM KLCI as a breakthrough of this resistance will see the short term trend of the FBM KLCI turning from sideways to uptrend, and may trigger a rally to the medium term resistance zone of 1,751 to 1,767, posted by the 50 and 60-day SMA.
Overnight, the Dow rose another 217.27 points or 1.22% to close at 17,977.68. Today, the FBMKLCI is likely to trade within a range of 1,697 to 1,730.
This week's expected range: 1647 – 1771
Today’s expected range: 1697 – 1730
Resistance: 1720, 1725, 1730
Support: 1697, 1702, 1709
Stocks to watch: ASIAPLY, CARING, ESCERAM, EURO, FLBHD, GESHEN, HEVEA, HOMERIZ, HUPSENG, IRCB, KIMHIN, MAGNI, MICROLN, MIECO, MINHO, MMSV, OMEDIA, PANTECH, PARAMON, PENTA, PLABS, POHUAT, REXIT, RUBEREX, SKPRES, SYF, TMCLIFE, VS, YEELEE
Stock pick highlight: HUPSENG (5024)
Last Price: RM1.24 +0.04
Support Level: RM1.20, RM1.16
Resistance Level: RM1.25, RM1.29, RM1.31, RM1.35, RM1.38, RM1.41, RM1.44, RM1.47, RM1.50, RM1.53, RM1.56
Entry Level: RM1.23 – RM1.24
HUPSENG (5024) rebounded from its intra-day low of 1.20 to close higher at the intra-day high of 1.24. Technically, the chart of HUPSENG formed a bullish white candlestick indicating good buying interest came into the stock yesterday. It breaks out from the consolidation forming a Rectangle pattern breakout. MACD hooked upward, is still below the signal-line but above the zero-line and its histogram also contracted upward, indicating an increased in momentum to the upside and a buy signal. RSI (14) rose to 64.9 from 59.4, indicating the stock is turning bullish from mildly bullish. Stochastic hooked upward to 79.4 from 71.8 and made a golden-cross over the slow stochastic line, issuing a stochastic buy signal, and indicated the stock is turning stronger after recent correction. The medium and long term trend of HUPSENG 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 RM1.25 will see an upside target of RM1.29, follow by RM1.31, RM1.35 RM1.38, RM1.41, RM1.44, RM1.47, RM1.50, RM1.53, and RM1.56.
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 (RM1.25). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM1.29, RM1.31, RM1.35 RM1.38, RM1.41), stop loss (RM1.19)
Mid Term – target price at (RM1.44, RM1.47, RM1.50, RM1.53, RM1.56), stop loss (RM1.15)
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