Stocks on Bursa Malaysia closed higher yesterday on bargain-hunting amid "easing worries" of inflation and possible production disruptions in Japan due to the recent earthquake. The FBM KLCI finished 13.5 points or 0.88% higher at 1,545.13 on persistent buying in heavyweight and selective counters. Losers led gainers by 481 to 391 while 261 counters were unchanged. Turnover shed to 1.951 billion shares worth RM2.566 billion from 2.338 billion shares worth RM2.481 billion transacted on Wednesday.
The FBM KLCI opened with an up gap of 4.98 points at 1,536.61 and traded in a narrow range of 2 points for the morning session. The key index staged a breakout from the intra-day consolidation range to move higher in the afternoon session to close at the day’s high. Chart-wise, The FBM KLCI formed a bullish white candlestick which indicates buyers were in control for the day. The key index had opened above the neckline of the head-and-should (H&S) pattern and continued to stay above it, with this move, the threat of the H&S pattern has eased and the downtrend which begun on January 18 is reversed. Hence, the FBM KLCI is likely to continue its up move to test the psychological resistance at 1,550.
MACD continued to move higher into the positive zone after crossing the zero-line two days ago, and indicates a continuation of the upward momentum. RSI (14) surged higher to 67.7 and has moved into the bullish zone. Stochastic is higher at 97.1, which indicates a very strong market strength. Nonetheless, it has moved into the short term overbought zone, and a pullback is likely to happen. Readings from the indicators showed that the FBM KLCI has turned bullish, and is likely to continue its upward momentum to challenge higher resistance levels.
The FBM KLCI has now turned bullish as what we have forecasted in Monday’s posting that “the FBM KLCI would turn bullish if it is able to clear the resistance at 1,524 and 1,530”, and it did. The short term trend is now up. However, the medium term trend remained sideways as the short term moving averages (MA) are still below the medium term 60-day MA. The market will only stage a bull-run when all the short term MAs cross above the 60-day MA. Long term uptrend remained intact. Immediate overhead resistance zone is at 1,549 to 1,556 while the downside support zone is at 1,538 to 1,528.
Overnight, the Dow fell -30.88 points or -0.25% to close at 12,319.73. Today, the FBM KLCI is likely to trade within a range of 1,528 to 1,556.
This week's expected range: 1483 – 1556
Today’s expected range: 1528 – 1556
Resistance: 1549, 1552, 1556
Support: 1528, 1531, 1538
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