Stocks on Bursa Malaysia rebounded to close higher yesterday, helped by gains in banking stocks. Asian markets, with the exception of Japan, also bounced back from their recent losses to close higher on bargain hunting. Cautious sentiment, however, remained on growing concern over the impact of the Euro-zone debt crisis and the weak China’s manufacturing activities against the backdrop of a poor global economic outlook. The FBM KLCI rose by 14.82 points or 1.03% to close at 1,447.99 after opening 1.26 points lower at 1,431.91. Advancers led decliners by 499 to 277 while 289 counters were unchanged. Turnover, however, fell to 1.499 billion shares worth RM1.077 billion from Wednesday’s 1.508 billion shares worth RM1.127 billion.
The FBM KLCI opened 1.26 points lower at 1,431.91 and fell to the intra-day low of 1,426.64 within the first thirty minutes of trade, and it rebounded to gradually climb higher for the rest of the day to close at the day’s high. Chart-wise, the FBM KLCI formed a bullish white candlestick which indicates bottom reversal and a breakout from last two day’s consolidation range. With the bullish up move yesterday, the key index is likely to continue its upward momentum to move higher today. Immediate overhead resistance zone is at 1,450 to 1,460 with the gap area at 1,452 to 1,454 being the main hurdle.
MACD continued to slide lower and just crosses below the zero-line, flashing a bearish signal. However, the histogram has turned shorter upward, reflecting the rebound and indicating a reduction in the downward momentum. RSI (14) has turned upward to 47.5, indicating an improvement in the relative strength to mildly bearish. Stochastic has turned upward to 22.8, and crossed above the slow stochastic line, making a reversal after hitting the short term oversold zone, and this might possibly indicates the beginning of a short term up cycle. Readings from the indicators showed that the FBM KLCI has possibly hit a short term bottom and is making a rebound.
The main trend of the FBM KLCI remained down and bearish. However, for the short term, the key index has closed above the 5-day moving average (MA), giving out a first signal of a possible short term trend reversal. Nonetheless, the key index is still below the 10, 20 and 30-day MAs, until and unless the current rebound can carry the index through the resistance zone formed by these short term MAs at 1,457 to 1,468, the present rebound may turn out to be just a dead-cat-bounce in a bear market. With volume continued to shrink, the overall market may continued to be dominated by the second and third liners in the active scene while FBM KLCI may continue with its consolidation.
US market was closed yesterday for the Thanksgiving Holiday. Today, the FBM KLCI is likely to trade within a range of 1,412 to 1,470.
This week's expected range: 1410 – 1520
Today’s expected range: 1412 – 1470
Resistance: 1456, 1463, 1470
Support: 1412, 1419, 1433