Stocks on Bursa Malaysia closed higher yesterday as gains in selected finance counters, led by CIMB, lifted the local bourse to end higher for the fourth consecutive day. Market talk that CIMB and RHB Capital are looking to scrap their proposed mega bank merger with Malaysian Building Society Bhd (MBSB) has triggered massive buying interest in the banking stocks. CIMB emerged the top gainer, rising 74 sen or 14.29 per cent to RM5.92. At close, the benchmark FBMKLCI stood at 1,748.9, up 13.82 points, or 0.8%, after hovering between 1,725.98 and 1,750.16 throughout the day. Gainers outpaced losers by 502 to 311 with 275 counters unchanged. Total volume surged to 1.90 billion shares worth RM2.11 billion from 1.36 billion shares worth RM1.46 billion on Monday.
Taking cue from the weak performance of Wall Street overnight, the FBMKLCI opened 8.54 points lower at 1,726.54 and slipped lower to the intra-day low of 1,725.98 briefly after opening. The key index rebounded from the low and climbed higher for the rest of the day with intermittent pullback, it touched the intra-day high of 1,750.16 before pulling back to close off high. Chart-wise, the FBMKLCI formed a bullish long white candlestick which indicates the bulls were in full control and continued its uptrend for the fourth consecutive day. Hence, the FBMKLCI is likely to continue its upward momentum to move higher today. Immediate overhead resistance zone is at 1,750 to 1,770, while the immediate downside support zone is at 1,738 to 1,725.
MACD continued to rise, albeit still below the zero-line, and its histogram also extended upward for the third consecutive bar, indicating continuation in the upward momentum. RSI (14) was higher at 50.6 from 46, indicating the short term relative strength of the key index has turned neutral from a mildly bearish state. Stochastic was higher at 50.7 from 45.1, and has made a golden-cross over the slow stochastic line, issuing a stochastic buy signal. Readings from the indicators showed that the FBMKLCI is turning neutral from a bearish state, and hence, is likely to climb higher.
The medium and long term trend of the FBMKLCI is still down and bearish. However, the bullish upward move yesterday has lifted the key index to close above the short term overhead resistance zone posted by the 10, 15 and 30-day simple moving average (SMA), as such, the short term trend of the FBMKLCI has turned upward, and hence, is likely to move higher today to test the immediate overhead psychological resistance of 1,750, follow by 1,759 and 1,770. The medium term overhead resistance zone posted by the 40, 50 and 60-day SMA is at 1,760, 1,774 and 1,781, and a break of the medium term resistance zone will see the FBMKLCI turning bullish and move higher toward the 1,800-point psychological target level. On the broader market, rotational play on small caps and ACE market is returning even though trading still remained cautious.
Overnight, the Dow fell 27.16 points or -0.15% to close at 17,613.68. Today, the FBMKLCI is likely to trade within a range of 1,709 to 1,774.
This week's expected range: 1679 – 1785
Today’s expected range: 1709 – 1774
Resistance: 1757, 1765, 1774
Support: 1709, 1717, 1733
Stocks to watch: AAX, BRIGHT, CIMB, DUFU, EFFICEN, GHLSYS, INARI, INSAS, IRIS, KIMLUN, LONBISC, OCK, OLDTOWN, ORNA, PELIKAN, PMETAL, SCNWOLF, SYSTECH, TMCLIFE, ZELAN
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