Stocks on Bursa Malaysia closed higher yesterday on bargain hunting. The strong overnight rebound of the US stock market and positive leads from Asian bourses also prompted investors to take positions. Asian markets were higher yesterday boosted by healthy earnings reports from US companies and optimism that US and European politicians could work together to address their debt problems. The FBM KLCI rose 6.95 points, or 0.45%, to close at 1,562.59 after opening 2.81 points higher at 1,558.45. Market breadth was bullish with 472 gainers as compared with 266 losers while 303 were unchanged. Trading volume, however, declined to 803.41 million shares worth RM1.3 billion from 977.86 million shares worth RM1.94 billion on Tuesday.
The FBM KLCI opened 2.81 points higher at 1,558.45, taking cue from the strong overnight gain on Wall Street, and moved higher to touch the intra-day high of 1,564.95 within the first hour of trading. The key index then moved sideways in a tight trading range to end the day off high at 1,562.59. Chart-wise, the FBM KLCI formed a bullish Harami candlestick pattern which indicates a possible changed in the investors’ sentiment from bearish to bullish. However, the up swing could well be just a technical rebound, and a confirmation is required to confirm the trend change. Immediate strong overhead resistance lies at 1,566 to 1,570-point level.
MACD continued to slide lower but at a reduced pace, indicating a reduction in the downward momentum. RSI (14) has hooked up to 44.7, indicating the short term relative strength of the FBM KLCI is mildly bearish. Stochastic is at 10.8, and has continued to slide lower into the short term oversold zone, indicating very weak market strength, and the down cycle is still in force. Readings from the technical indicators showed that the FBM KLCI is currently very weak and bearish, and the correction or consolidation may prolong.
The short term trend of the FBM KLCI remained down, while the medium and long term trend is still up. For the immediate near term, the FBM KLCI is likely to move sideways or range-bound to consolidate itself. Immediate support zone is at 1,552 to 1,536 provided by the 60 and 120-day moving averages, while the immediate overhead resistance zone is at 1,566 to 1,570.
Overnight, the Dow fell -15.51 points or -0.12% to close at 12,571.91. Today, the FBM KLCI is likely to trade within a range of 1,552 to 1,572.
This week's expected range: 1544 – 1606
Today’s expected range: 1552 – 1572
Resistance: 1566, 1569, 1572
Support: 1552, 1555, 1559
Stocks to watch: HIAPTEK, PERWAJA, ENG, RANHILL