Stocks on Bursa Malaysia snapped its losing streak to end higher yesterday on technical rebound following the release of positive second quarter 2015 gross domestic product (GDP) figures. The second quarter GDP growth of 4.9% was better than market expectation of 4.5%. The FBM KLCI finished at 1,621.62, up 11.69 points, or 0.73%, after fluctuating between 1,605.46 and 1,626.86 throughout the day. The rebound was led by gains in the finance counters. Gainers outpaced losers by 714 to 217 with 252 counters unchanged. Total volume fell to 1.86 billion units valued at RM2.21 billion from 2.49 billion units valued at RM2.29 billion on Wednesday.
Continuing the selling pressure from Wednesday, the FBM KLCI opened 4.3 points lower at 1,605.63 and slipped to hit the intra-day low of 1,605.46 briefly after opening. The key index rebounded from the low and rallied higher with intermittent pullback on profit taking. It hit the intra-day high of 1,626.86 after the opening bell of the afternoon session before pulling back to move sideways range-bound. Chart-wise, the FBM KLCI formed a bullish white piercing-line candlestick pattern, a bottom reversal candlestick pattern, which indicates the fight back of the bulls after being beaten down for five consecutive sessions. Nevertheless, the FBM KLCI will have to close the gap at 1,629 to 1,635 to confirm the reversal. Hence, the FBM KLCI is likely to climb higher today on follow through buying momentum. Immediate overhead resistance zone is at 1,626 to 1,629, while the immediate downside support zone is at 1,616 to 1,605.
MACD continued to slide lower, but its histogram was just marginally lower, indicating a reduction in the bearish momentum. RSI (14) hooked upward to 28.7 from 23.9, indicating an oversold rebound and the key index is still in the very bearish state. Stochastic hooked upward to 6.6 from 3.7 but is still below the slow stochastic line, indicating a technical rebound. Readings from the indicators showed that the FBM KLCI was staging an oversold rebound yesterday, and is likely to climb higher on follow through rebound.
The broad technical picture of the FBM KLCI still remained bearish and the trend is down. However, the rebound yesterday showed that the key index was finding support at the 1,603 to 1,605 level. This level coincided with the 76.4% Fibonacci projection (FP) target of 1,604 for the down wave starting from 1,867; and this support level also coincided with the 50% Fibonacci retracement (FR) support level of 1,603 for the range from 1,310 to 1,896, and hence, reinforcing the support. Immediate overhead resistance is at the 61.8% FP level of 1,631-point, and only if the key index is able to break through the 1,631-point resistance will it see a rally to a higher target level of 1,652 (50% FP), otherwise, the FBM KLCI will remained in range-bound consolidation.
Overnight, the Dow rose a marginal 5.74 points or 0.03% to close at 17,408.25. Today, the FBMKLCI is likely to trade within a range of 1,587 to 1,648.
This week's expected range: 1591 – 1768
Today’s expected range: 1587 – 1648
Resistance: 1630, 1639, 1648
Support: 1587, 1596, 1609
Stocks to watch: BPPLAS, CAB, CAREPLS, COCOLND, DSONIC, EVERGRN, EWEIN, JHM, KULIM, LCTH, LEESK, LUXCHEM, MITRA, MYEG, OCK, PASUKGB, POHUAT, SGB, SLP, TALIWRK, VS
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