Stocks on Bursa Malaysia closed broadly higher yesterday, supported by gains in small-capitalised counters as well as plantation and industrial-related shares. The FBM KLCI displayed good gain indicating the well acceptance of the revised budget announced by Prime Minister Najib Abdul Razak a day ago. The benchmark FBM KLCI rose 19.98 points or 1.14% to close at 1,770.09, after moving between 1,751.46 and 1,770.09 throughout the day. Gainers trounced losers by 559 to 287, while 280 counters were unchanged. Total volume rose to 2.2 billion units worth RM2.4 billion from 2.1 billion units worth RM2 billion on Tuesday.
The FBM KLCI opened 2.79 points higher at 1,752.90 and slipped lower to hit the intra-day low of 1,751.46 briefly after opening. The key index rebounded from the low and moved higher for the rest of the day with intermittent mild pullback on profit-taking. The FBM KLCI surged 9.58 points in the closing phase to close at the highest point of the day. Chart-wise, the FBM KLCI formed a bullish long white candlestick which indicates the bulls were in full control for the day and the key index breakouts from the consolidation on Tuesday. Hence, the FBM KLCI is likely to continue its upward trend to move higher today. Immediate overhead resistance zone is at 1,778 to 1,789, while the immediate downside support zone is at 1,751 to 1,745.
MACD continued to rise and is approaching the zero-line and its histogram extended upward strongly, indicating a strong increased in the FBM KLCI’s upward momentum. RSI (14) rose to 58.1 from 51.2, indicating the key index is turning bullish from a mildly bullish state. Stochastic surged to 81.2 from 67.1, indicating the FBM KLCI is gaining strength and a continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI is turning bullish and is gaining its upward momentum. Thus, the key index is likely to move higher today on follow through buying momentum.
The main or long term trend of the FBM KLCI is still down while short term trend is up. Nonetheless, with the bullish upward move yesterday, the FBMKLCI has for the first time closed above the medium term 50-day simple moving average (SMA) since closing below it on November 28, and this indicates the medium term trend of the FBM KLCI is starting to turn upward from a downtrend before. Nevertheless, in order for the medium term trend to turn up, the FBM KLCI must close above the cluster of medium term moving averages represented by the 40, 50, 60, 70 and 80-day SMA, where the medium term overhead resistance zone is currently at 1,776, ,1779 and 1,786 posted by the 60, 70 and 80-day SMA. The bullish move yesterday might have kicked-off a long waited Chinese New Year rally on Bursa Malaysia after the bourse stayed in a bearish mode for almost six months since the correction started in mid July 2014.
Overnight, the Dow rose 39.05 points or 0.22% to close at 17,554.28. Today, the FBMKLCI is likely to trade within a range of 1,739 to 1,788.
This week's expected range: 1692 – 1783
Today’s expected range: 1739 – 1788
Resistance: 1776, 1782, 1788
Support: 1739, 1745, 1757
Stocks to watch: AZRB, BONIA, CENTURY, ECOWLD, EFFICEN, FAJAR, GBGAQRS, INARI, IRIS, K1, LANDMRK, LBALUM, LIONIND, MIKROMB, PASUKGB, SUPERMX, SYCAL, TAKASO, THHEAVY, ZELAN
Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. The Stocks to watch is not a recommendation to buy or sell the particular stock, as it is only meant for graduates of the "Share Trading the Pro Way" course as case study. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.