Stocks on Bursa Malaysia closed higher yesterday in line with firmer regional markets. The rise in the local and other bourses in Asia was driven by New York's strong gains last Friday coupled with optimism of a solution to the Euro-zone debt crisis and a possible roll-out of the third quantitative easing. Gains in blue chips like Genting, Axiata, Maxis and Tenaga Nasional lifted the market significantly. The FBM KLCI rose 11.19 points or 0.78% to end at 1,450.02 after opening 11 points better at 1,449.83. Gainers led losers by 556 to 203 while 254 counters were flat. Turnover declined to 1.238 billion shares worth RM1.3 billion from 1.253 billion shares worth RM1.095 billion last Friday.
Taking cue from the strong performance of Wall Street last Friday, the FBM KLCI opened with an up gap of 11 points at 1,449.83 and climbed to the intra-day high of 1,462.06 at mid morning. The key index then moved sideways, and heavy profit-taking activity which appeared in mid afternoon pushed the index to close near the low of the day. Chart-wise, the FBM KLCI formed a gravestone Doji which indicates the bulls were initially strong in pushing up the key index, but later the bears surfaced and pressed it back down. The key index has resumed its immediate short term uptrend as it is now closing above the 5-day moving average (MA), as well as is above the 1,450-point psychological resistance turned support level, and might continue its upward move to re-test the recent high of 1,465.48.
MACD was slightly higher, but the histogram turned shorter, indicating a loss in the upward momentum. Nonetheless, the MACD is still in the positive zone. RSI (14) has hooked upward to 56.8, indicating the relative strength of the key index has pick up slightly to become mildly bullish. Stochastic slid lower to 79.3, indicating a continuation of the down cycle and weakening of the market strength. Readings from the indicators showed that the FBM KLCI is mildly bullish but is still in a consolidation mode.
The short term trend of the FBM KLCI remained up, while the medium and long term trend is still down. The key index is now sitting right below the medium term 60-day MA which is currently at 1,452.86, a decisive close above this level will see the FBM KLCI moving higher to test the next resistance level posted by the 360-day MA at 1,469, and a decisive close above the 360-day MA may trigger a rally towards the 1500-point psychological resistance level. With volume maintaining above the 1 billion shares mark, the overall market is likely to remain active with rotational play on the second and third liners. Overnight, the Dow rose +104.83 points or +0.89% to close at 11,913.62. Today, the FBM KLCI is likely to trade within a range of 1,432 to 1,475.
This week's expected range: 1389 – 1503
Today’s expected range: 1432 – 1475
Resistance: 1459, 1467, 1475
Support: 1432, 1440, 1445