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Thursday, November 25, 2010

FBM KLCI - rebounded to close marginally higher


Stocks on Bursa Malaysia rebounded to close mostly higher yesterday as Asian stocks stabilized after a sell-off sparked by North Korea's deadly shelling of a South Korean island. The FBM KLCI rose 1.01 points or 0.07% to close at 1488.54, after opening 7.63 points lower at 1479.9. Gainers led losers by 537 to 267 while 235 counters were unchanged. Turnover decreased to 1.065 billion shares valued at RM1.812 billion from 1.175 billion shares worth RM2.009 billion on Tuesday.

The FBM KLCI opened with a big down-gap of 7.63 points at 1479.90 on panic-selling, and fell to the intra-day low of 1476.82 within the first fifteen minutes. The key index rebounded to gradually move up to the intra-day high of 1493.01 before a last minute profit-taking sent it back below the 1490 level to close at 1488.54. Chart-wise the FBM KLCI formed a piercing-line candlestick which indicates counter-attack of the bulls after a day of sell down by the bears. The formation of this candlestick pattern indicates the market is taking a pause at the current level, and the short term down trend is not over yet until the key index close firmly above the 1500 psychological level again.

MACD continued to move lower indicating the downward momentum is still in-force. RSI (14) at 44.3 has gently hooked reflecting a weak rebound, and is still in the mildly bearish zone. Stochastic at 19.4 continued to move lower, and is entering the short term oversold zone. Readings from the indicators indicates that the FBM KLCI is still weak, however, might stage a rebound soon as it is short term oversold.

The short term trend of the FBM KLCI is still down, while its medium to longer term uptrend remained intact, hence, one should view this as an opportunity to buy quality shares at lower price level. Overnight, the Dow rose +150.91 points or +1.37% higher to close at 11,187.28. Today, the FBM KLCI is likely to trade within a range of 1463 to 1509.

This week's expected range: 1470 – 1525
Today’s expected range: 1463 – 1509

Resistance: 1495, 1502, 1509
Support: 1463, 1470, 1479

Stock to watch: Dialog, Sunway, Sunway-wc, Suncity, Mycron

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