Stocks on Bursa Malaysia ended broadly higher yesterday in tandem with the rebound on other Asian equity markets, driven by hope that German authorities would approve an increase in Euro zone rescue funds. The FBM KLCI closed 15.91 points or 1.16% higher at 1,387.46 after opening at 1,361.43. Gainers beat losers by 513 to 229 with 228 counters unchanged. Turnover was higher at 920.957 million shares, worth RM1.366 billion, from 850.054 million shares, worth RM1.517 billion, registered on Wednesday.
Taking cue from the weak performance of Wall Street overnight, the FBM KLCI opened with a down gap of 10.12 points at 1,361.43 and slid to the intra-day low of 1,357.95 within the first ten minutes. The key index then rebounded and moved upward gradually to touch the intra-day high of 1,388.55 before settling at 1,387.46. Chart-wise, the FBM KLCI formed a bullish white candlestick which indicates buyers were in control for the day. The key index had managed to breakthrough the resistance zone at 1,377 to 1,387 formed by the down gap, and is likely to continue with its upward momentum to test the next higher resistance of 1,400-point.
MACD has turned upward, indicating an increase in the upward momentum. Nonetheless, as the MACD is still below the zero-line as well as the signal-line, the present up swing may just be part of a short term technical rebound. RSI (14) continued to move higher to 38.7 from 33.4 previously, indicating a positive improvement in the short term relative strength, even though it is still in the bearish zone. Stochastic continued its upward move to 37.6, indicating a continuation in the short term up cycle. Readings from the indicators showed that the FBM KLCI is gradually turning positive, even though the broad picture is still rather bearish.
The main trend of the FBM KLCI remained down. However, the immediate short term trend of the FBM KLCI has turned upward after it cross the short term 5-day moving average (MA) a day earlier. It is now sitting right below the 10-day MA resistance of 1,388, and a cross above this resistance level will likely see the FBM KLCI moving towards the next higher target zone of 1,400 to 1,420. Immediate downside support zone is at 1,377 to 1,357.
The equity market is likely to continue its uptrend today as German lawmakers rallied behind Chancellor Angela Merkel to approve a stronger Euro zone bailout fund on Thursday. Overnight, the Dow rose +143.08 points or +1.30% to close at 11,153.98. Today, the FBM KLCI is likely to trade within a range of 1,336 to 1,420.
This week's expected range: 1263 – 1461
Today’s expected range: 1336 – 1420
Resistance: 1398, 1409, 1420
Support: 1336, 1347, 1367