Stocks on Bursa Malaysia closed higher yesterday amid fresh signs of global economic recovery, boosted by investors' appetite for riskier asset, and fund managers' renewed interest in finance counters after a recent sell down provided support to the key index. The benchmark FBM KLCI touched a high of 1,502.53 before ending at 1,485.26, a 0.89% or 13.16 point increase over Wednesday's close. The index had opened higher by 14.82 points at 1,486.92 and had hit a low of 1,484.42. Gainers led losers by 514 to 279 while 309 counters were unchanged. A total of 1.66 billion shares worth RM1.79 billion changed hands compared with 1.53 billion shares worth RM2.02 billion on Wednesday.
Taking cue from the 490 points gain of the Dow overnight, the FBM KLCI opened with a big up gap of 14.82 points at 1,486.92 and climbed higher to touch the intra-day high of 1,502.53. Heavy profit-taking activity pressed the key index to the intra-day low of 1,484.42 before rebounding slightly to close at 1,485.26. Chart-wise, the FBM KLCI formed bearish black shooting star candlestick, a top reversal candle pattern, which indicates heavy distribution or profit-taking when the key index approached the 1,500-point psychological level. Hence, the FBM KLCI is likely to further correct itself and cover the gap formed yesterday. Immediate support is expected at 1,480-point level provided by the 360-day moving average (MA) and the 1,472-point level.
MACD has turned upward and goes above the zero-line, indicating a change in the index’s momentum from bearish to bullish. Nonetheless, the MACD is still slightly below the signal-line, and a cross above the signal-line would generate a strong buy signal. RSI (14) continued to climb higher to 59.4 from 55.9, indicating an improvement in the relative strength and that the key index is turning bullish. Stochastic was higher at 62.2, crossing the mid range, indicating a continuation of the up cycle and that the market strength is turning stronger. Readings from the indicators showed that the FBM KLCI is gradually turning bullish.
With strong up move over the last two days, the short term trend of the FBM KLCI has turned upward, while the medium term trend is still sideways. The long term trend is still bearish, and nonetheless, the key index has now closed above the 360-day MA but is still below the cluster of other long term moving averages. If the FBM KLCI is able to breakthrough the strong resistance zone formed by the cluster of long term MAs at 1,500 to 1,510, then the key index would turn fully bullish. Immediate overhead resistance zone is at 1,493 to 1,502 while the downside support zone is at 1,484 to 1,472.
Overnight, the Dow fell -25.65 points or -0.21% to close at 12,020.03, and today, the FBM KLCI is likely to trade within a range of 1,460 to 1,521
This week's expected range: 1392 – 1480
Today’s expected range: 1460 – 1521
Resistance: 1497, 1509, 1521
Support: 1460, 1472, 1478