Stocks on Bursa Malaysia closed broadly higher yesterday, beating the regional trend with the benchmark index ended higher prompted by active buying momentum for heavyweights, despite regional market turning lower amid the uncertainty in Greece's conditional bailout agreement. The FBM KLCI finished at 1,721.10, up 4.99 points, or 0.29%, after moving between 1,720.06 and 1,727.07 throughout the day. Gainers outperformed losers by 477 to 287 with 326 counters unchanged. Total volume reduced slightly to 1.48 billion units valued at RM1.69 billion from 1.49 million units valued at RM1.45 billion, recorded on Monday.
Taking cue from the strong performance of Wall Street overnight, the FBM KLCI opened 3.95 points higher with an upside runaway gap at 1,720.06, the intra-day low, and rallied higher to touch the intra-day high of 1,727.07 forty five minutes after opening. The key index retreated from the high on profit taking to move sideways range-bound for the rest of the day, but late hour selling dragged the index lower, giving back much of its gains for the day. Chart-wise, the FBM KLCI formed a white shooting-star candlestick, a top reversal candlestick pattern, which indicates the bulls were initially strong in pushing the index higher but were later took over by the bears, and hence, the FBM KLCI is likely to correct downward or consolidate today if sellers continue to stay dominant. Immediate overhead resistance zone is at 1,727 to 1,738, while the immediate downside support zone is at 1,720 to 1,718.
MACD and its histogram continued to climb higher, indicating an increased in momentum to the upside. RSI (14) was higher at 47.5 from 45.1, indicating an improvement in the short term relative strength to the bullish side. Stochastic was higher at 60.7 from 48.6, indicating further strengthening of the key index and continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI is gaining strength from the short term perspective. However, from the medium term perspective, it is still bearish as MACD is still below the zero-line and RSI below 50.
The medium to long term trend of the FBM KLCI still remained down as the key index continued to stay below the medium and long term moving averages, as well as within the downtrend channel, measuring from the pivot high of 1,867 to current level. Nonetheless, the short term trend has turned sideways range-bound with an upward bias as the key index is closing above the short term moving averages but the 5-day SMA is still below the 10, 15 and 20-day SMA, and is still staying within the short term range of 1,685 to 1,738. On top of that, the FBM KLCI also staged a pullback after breaking the upper resistance line of the downtrend channel, indicating the key index is likely to stay in consolidation. Bursa Malaysia is likely to see more profit taking activity today and tomorrow ahead of the Hari Raya Aidilfitri holiday on Friday, and the market will be opened for the morning session only on Thursday.
Overnight, the Dow rose 75.90 points or 0.42% to close at 18,053.58. Today, the FBMKLCI is likely to trade within a range of 1,711 to 1,734.
This week's expected range: 1647 – 1771
Today’s expected range: 1711 – 1734
Resistance: 1725, 1729, 1734
Support: 1711, 1715, 1718
Stocks to watch: A&M, ASDION, AWC, BENALEC, BTM, CAREPLS, CENTURY, CHINA50-H2, E&O, EATECH, EFORCE, ENGTEX, EVERGRN, JHM, KPSCB, LCTH, MIKROMB, OKA, PRLEXUS, SOLUTN, SUPERMX, YSPSAH
Stock pick highlight: LCTH (5092)
Last Price: RM0.58 +0.07
Support Level: RM0.52, RM0.47
Resistance Level: RM0.59, RM0.60, RM0.62, RM0.65, RM0.67, RM0.70, RM0.73, RM0.75, RM0.80, RM0.84, RM0.89
Entry Level: RM0.575 – RM0.585
LCTH (5092) rebounded from its intra-day low of 0.52 to close higher at 0.58 after hitting the intra-day high of 0.59. Technically, the chart of LCTH formed a bullish long white candlestick with increasing volume indicating strong buying interest came into the stock yesterday. It breaks out from the consolidation forming a Saucer pattern breakout. MACD swung upward, and made a golden-cross over the signal-line and is above the zero-line, its histogram also extended upward strongly, indicating an increased in momentum to the upside and a buy signal. RSI (14) rose to 70.7 from 56.5, indicating the stock is turning very bullish from mildly bullish. Stochastic rose to 61.1 from 31.1 and made a golden-cross over the slow stochastic line, issuing a stochastic buy signal, and indicated the stock is turning strong after recent correction. The medium and long term trend of LCTH is up, and the short term trend is also up with the 5-day SMA crossing over the 10-day SMA and both are above the 30-day SMA, and a confirmed breakout above RM0.59 will see an upside target of RM0.60, follow by RM0.62, RM0.65 RM0.67, RM0.70, RM0.73, RM0.75, RM0.80, RM0.84, and RM0.89.
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 (RM0.59). Those with lower risk appetite should wait at the side-line and buy on the dip.
Short Term – target price at (RM0.60, RM0.62, RM0.65 RM0.67, RM0.70), stop loss (RM0.51)
Mid Term – target price at (RM0.73, RM0.75, RM0.80, RM0.84, RM0.89), stop loss (RM0.46)
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