Stocks on Bursa Malaysia ended higher yesterday on continued positive buying sentiment in line with the firmer regional markets, as investors became more confident following the progress of the European debt crisis and positive economic data coming out of the US and China. The FBM KLCI rose 15.80 points, or 1.04%, to 1,537.09 after opening 5.32 points higher at 1,526.61. Advancers led decliners by 643 to 286 while 298 counters were unchanged. Volume rose to 2.58 billion shares valued at RM2.87 billion from 1.88 billion shares valued at RM2.29 billion on Tuesday. The market was closed on Wednesday for Federal Territory Day holiday.
Taking cue from the strong performance on Wall Street overnight, the FBM KLCI opened with an up gap of 5.32 points at 1,526.61 and surged to the intra-day high of 1,540.89 within the first five minutes of trading. The key index then experienced heavy profit-taking which push it to the intra-day low of 1,526.57, and it rebounded to gradually climb higher to close at 1,537.09. Chart wise, the FBM KLCI formed a bullish white candlestick with an upside breakaway gap, which showed the bulls were rushing in to take control of the market. With the strong up move and breaking of the 1,530 resistance level yesterday, the key index is likely to continue its upward momentum to move higher today with an immediate upside target of 1,545 and 1,553.
MACD has turned upward, and so is the histogram, indicating a possible change in the market momentum from down to up. Nevertheless, the MACD is still below the signal-line. RSI (14) continued to climb higher to 64.2 from 57.2 a day ago, indicating the short term relative strength of the key index has again turned bullish. Stochastic has hooked upward to 64.9 and has crossed above the slow stochastic line, indicating an improvement in the market strength and a possible changed in the short term market cycle from down to up. Readings from the indicators showed that the FBM KLCI is undergoing a changed in terms of its momentum from down to up, and a possible new uptrend is in the making.
With the strong upward movement yesterday, the FBM KLCI had broken out of its short term sideways consolidation range to resume its uptrend. It is likely to move higher to test the immediate overhead resistance zone of 1,545 to 1,553. Judging from the volume and value traded which is above the 2 billion mark; the FBM KLCI is likely to remain active with rotational play. However, some profit-taking activity is expected today before the long weekend holiday, as Bursa Malaysia will be closed for Prophet Muhammad’s Birthday on Monday as a replacement and Thaipusam holiday on Tuesday.
Overnight, the Dow fell a marginal -11.05 points or -0.09% to close at 12,705.41. Today, the FBM KLCI is likely to trade within a range of 1,514 to 1,556
This week's expected range: 1507 – 1538
Today’s expected range: 1514 – 1556
Resistance: 1544, 1550, 1556
Support: 1514, 1520, 1528.
Stocks to watch: MUHIBAH, GUANCHG, ZELAN, TEBRAU, KIMLUN