Stocks on Bursa Malaysia staged a late rebound to close higher yesterday, tracking the bullish regional markets. News that the Italian government has managed to sell its bonds at relatively good prices helped boost the regional markets. Overall, the local market was still resilient as investors were still looking for a boost from major projects such as the mass rapid transit and the spending in the oil and gas sector. The FBM KLCI rose 2.57 points, or 0.16%, to close at 1,580.67. Advancers led losers by 389 to 306 while 327 counters were unchanged. Turnover rose to 843.27 million shares valued at RM1.57 billion from 832.79 million shares valued at RM1.55 on Tuesday.
The FBM KLCI opened 0.55 point higher at 1,578.65 and surged to the intra-day high of 1,580.75 within the first thirty minutes, and profit-taking immediately surfaced which pushed the key index to the intra-day low of 1,576.37, before late afternoon bargain hunting on selected heavyweights pushed the key index to close near the day’s high. Chart-wise, the FBM KLCI formed a small white hammer-like candlestick in Harami position, which indicates consolidation and mild rebound of the benchmark index after two days of heavy losses. The FBM KLCI may continue to move higher today, however, the resistances at 1,585 to 1,586 posts by the 5 and 10-day moving averages (MA) may prevent further up move.
MACD continued to slide lower, and had made a dead-cross over the signal line, giving out a sell signal for the FBM KLCI. However, as the MACD is still above the zero-line, the current weakness may just well be a temporary correction in an uptrend. RSI (14) gently hooked up to 57.9, reflecting the mild rebound yesterday, and the relative strength of the key index is currently mildly bullish. Stochastic, however, continued to slide lower to 60.3, indicating the short term down cycle is still in force, and the market strength is weakening. Readings from the indicators showed that the momentum of the FBM KLCI has weakened, and this may continue for a while during the consolidation process.
The short term trend of the FBM KLCI has turned downward, while the medium and long term trend still remained up. As the FBM KLCI is currently below the 5 and 10-day MAs but is still above the 20 and 30-day MAs, the key index is likely to consolidate itself within a trading range of 1,570 to 1,586. Immediate overhead resistance zone is at 1,586 to 1,597, while the downside support zone is at 1,574 to 1,567. The benchmark FBM KLCI is likely to continue to be range-bound, while rotational play will prevail among the second and third liners.
Overnight, the Dow rose +44.73 points or +0.36% to close at 12,491.61. Today, the FBM KLCI is likely to trade within a range of 1,573 to 1,586.
This week's expected range: 1565 – 1614
Today’s expected range: 1573 – 1586
Resistance: 1582, 1584, 1586
Support: 1573, 1575, 1577