Stocks on Bursa Malaysia ended higher yesterday, helped by gains in selected blue chips. Month-end window-dressing and portfolio tweaking by hedge fund managers ahead of their first-half earnings reports also provided the support to the index. The overall market was positive and moving towards breaking the resistance level. The FBM KLCI rose 4.99 points to close at 1,575.01. Advancers led decliners by 434 to 333 while 319 counters closed unchanged. Volume rose to 1.04 billion shares valued at RM1.80 billion from 935.53 million shares valued at RM1.92 billion on Tuesday.
The FBM KLCI opened with an up gap of 2.57 points at 1,572.59 and surged to the intra-day high of 1,575.81 within the first ten minutes. The key index was basically in an intra-day downtrend with intermittent rebound even though it was trading in the positive territory, and it hit the intra-day low of 1,570.39 before rebounding strongly to close at 1,575.01 on last minute buying of selected blue-chip stocks. Chart-wise, the FBM KLCI formed a white spinning-top like candlestick which indicates hesitation of the key index to move higher. In fact, the intra-day price action showed that there were heavy profit-taking activities throughout the day. However, the last minute job had covered up the selling activities. Nevertheless, the key index is likely to move higher to re-test the historical high of 1,576.95.
MACD continued to climb higher, indicating a pick up in the upward momentum. RSI (14) also climb higher to 65.8, indicating the relative strength of the FBM KLCI is getting more bullish. Stochastic was higher at 93.2, indicating strong market strength and the short term up cycle is intact. Readings from the indicators showed that the FBM KLCI is picking up in strength and momentum, and is likely to continue its upward move to scale new high.
The underlying uptrend of the FBM KLCI is intact, as the key index is staying above all the short, medium and long term moving averages. Immediate overhead resistance is the historical high level of 1,576.95, and a move beyond this level will send the benchmark index into the uncharted territory, targeting the 1,600-point level. Immediate downside support zone is at 1,566 to 1,560. With the volume again going above the 1 billion shares mark, the overall market is likely to see more rotational play in the second and third liners with the FBM KLCI remained bullish.
Overnight, the Dow rose +72.73 points or +0.60% to close at 12,261.42. Today, the FBM KLCI is likely to trade within a range of 1,566 to 1,582
This week's expected range: 1540 – 1577Today’s expected range: 1566 – 1582
Resistance: 1577, 1579, 1582Support: 1566, 1568, 1571