Stocks on Bursa Malaysia closed on a firmer note yesterday, in tandem with the rebound in share prices on most regional markets. The local bourse received a boost after China's shares rebounded and on anticipated hopes that Slovakia would enact a Euro-zone rescue fund by the end of this week. The local equity market was buoyed by the sentiment of optimism in the region, including China's move to buy bank shares. A bullish anticipation that the general elections will be soon, also contributed to the market's performance yesterday. The benchmark FBM KLCI rose 16.85 points or 1.19% to close at 1,428.5, after opening 2.75 points better at 1,414.4. Gainers thumped losers by 558 to 177 while 272 counters were unchanged. Turnover improved to 1.08 billion shares worth RM1.30 billion from the 1.06 billion shares worth RM1.38 billion on Tuesday. 

The FBM KLCI opened 2.75 points higher at 1,414.40 but experienced heavy profit-taking activity which sent the key index to the intra-day low of 1,402.08 within the first fifteen minutes. The key index rebounded strongly and gradually moved upward with intermittent mild pullback to finish the day at the highest point of the day. Chart-wise, the FBM KLCI formed a bullish white candlestick which indicates the bulls were very much in control for the day. As mentioned in yesterday’s analysis, the key index will rally higher if it breakthrough the resistance zone at 1,415 to 1,423, and it did. The strong buying momentum is likely to carry the FBM KLCI higher to test the next higher target of 1,442 and 1,450.

MACD continued to climb higher, indicating a continued increased in the upward momentum. Nonetheless, as it is still below the zero-line, the present up move may just be a bear market rally. RSI (14) was higher at 54.7, indicating the FBM KLCI had turned mildly bullish for the first time after it moved below the 50-level and turned bearish on 18/07/2011. Stochastic surged higher to 91.5, indicating very strong market strength and a continuation of the short term bullish up cycle. Readings from the indicators showed that the FBM KLCI is turning bullish for the short term, and the upward momentum may push the key index higher.

The short term trend of the FBM KLCI has turned up, while the medium and long term trend remained down. The key index is currently closing above the short term 5, 10, 20 and 30-day moving averages (MA), and is likely to move higher to test the medium term 50-day MA at 1,450 and strong resistance is anticipated at the 1,450 to 1,468 zone. With the volume going above the 1 billion shares mark, the overall market is likely to remain active. Overnight, the Dow rose +102.55 points or +0.90% to close at 11,518.85. Today, the FBM KLCI is likely to trade within a range of 1,393 to 1,455.

This week's expected range: 1336 – 1452

Today’s expected range: 1393 – 1455

Resistance: 1438, 1446, 1455

Support: 1393, 1410, 1415

Stocks to watch: SUNWAY, MUHIBAH, MBSB, MHB