Stocks on Bursa Malaysia closed higher yesterday, supported by gains in selected finance counters and the recovery of the ringgit. Heavyweight blue-chips, Maybank, was among the top gainers rising 21 sen, or 2.5%, to RM8.60 while CIMB, one of the most actively traded counters, increased 16 sen, or 2.78%, to RM5.91. At close, the benchmark FBMKLCI stood at 1,745, up 2.99 points, or 0.17% after hovering between 1,738.24 and 1,750.94 throughout the day. Gainers led losers by 497 to 283 while 304 counters were unchanged. Total volume rose to 1.9 billion shares worth RM2.3 billion from 1.8 billion shares worth RM2.5 billion on Wednesday.
The FBMKLCI opened higher with an upside gap of 5.53 points at 1,747.54 and surged to hit the intra-day high of 1,750.94 within ten minutes after opening. However, heavy profit-taking activity dragged the key index lower to hit the intra-day low of 1,738.24. The FBMKLCI rebounded from the low and climbed higher for the rest of the day to close 2.99 points higher at 1,745.00. Chart-wise, the FBMKLCI formed a black spinning-top candlestick with a slightly longer lower shadow which indicates uncertainty of market direction with a bearish bias. Hence, the FBMKLCI is likely to stay range-bound with a downward bias. Immediate downside support zone is at 1,738 to 1,725, while the overhead resistance zone is at 1,750 to 1,760.
MACD and its histogram continued to rise, indicating further increase in the upward momentum. However, as MACD is still below the zero-line, current uptrend may turn out to be just a technical rebound in a bigger downtrend. RSI (14) hooked upward to 49.4 from 48.4, indicating a mild rebound and the key index is still in a mildly bearish state. Stochastic rose to 60.8 from 55.7, indicating a mild gain in the index strength and continuation of the short term up cycle. Readings from the indicators showed that the FBMKLCI staged a mild technical rebound.
The medium to long term trend of the FBMKLCI is still remained down and bearish. However, the short term trend of the FBMKLCI has turned sideways range-bound as the key index continues to stay within a range of 1,706 to 1,770. The FBMKLCI has also closed above the short term 5, 10, 15, 20 and 30-day SMA, indicating an upward bias for the short term, and hence, if the key index is able to break above the immediate overhead resistance of 1,750, it is likely to climb higher to test the medium term resistance of 1,770 posted by the 50-day SMA. On flip side, if the FBMKLCI breaks below the downside support zone of 1,740 to 1,735 provided by a cluster of short term moving averages, it will plunge lower to test the lower support of 1,725. On the broader market, rotational play has returned to the small caps and ACE market counters amid cautious trading.
Overnight, the Dow fell 106.38 points or -0.61% to close at 17,320.71. Today, the FBMKLCI is likely to trade within a range of 1,725 to 1,763.
This week's expected range: 1679 – 1785
Today’s expected range: 1725 – 1763
Resistance: 1751, 1757, 1763
Support: 1725, 1732, 1738
Stocks to watch: BENALEC, DBHD, DAYANG, DIALOG, ECONBHD, FITTERS, HOVID, IVORY, LBALUM, LIONDIV, MUHIBAH, NOVAMSC, PMCORP, PMHLDG, PASUKGB, PERDANA, PRLEXUS, TGOFFS, TAS, WILLOW
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