Stocks on Bursa Malaysia closed higher yesterday, buoyed by the rally in regional markets sparked by comments from US Federal Reserve chairman Ben Bernanke that easy monetary policy would remain to reduce unemployment. The benchmark FBM KLCI rose 5.12 points or 0.32% to 1,588.10 after opening 2.82 points higher at 1,585.80. Advancers beat decliners by 389 to 381 while 337 counters were unchanged. Turnover was higher at 1.944 billion shares worth RM1.663 billion from 1.497 billion shares worth RM1.334 billion on Monday.
Taking cue from the strong performance on Wall Street overnight, the FBM KLCI opened with an up gap of 2.82 points at 1,585.80 and surged to the intra-day high of 1,591.03 within the first ten minutes of trading. The key index got congested and slid lower from the high for the rest of the day, and nonetheless, it was staying in the positive territory throughout the day. Chart-wise, the FBM KLCI formed a white inverted hammer-like candlestick which indicates the bulls were initially dominant but the bears managed to cap the gain. The rebound yesterday has reversed the effect of the black inverted hammer candlestick formed a day ago, but as the candlestick currently formed is also an inverted hammer, it showed strong resistance at this level and the key index might make a pause today. Nevertheless, the key index is continuing its uptrend with an immediate resistance zone at 1,591 to 1,594.
MACD again turned upward after hooking downward a day ago, and the histogram also turned shorter upward indicating a gain in the upward momentum. Nevertheless, MACD is still below the signal-line. RSI (14) has hooked upward to 62.9, indicating the short term relative strength is still in the bullish state. Stochastic was higher at 84.9, indicating a continued improvement in the market strength and a continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI is still in a short term bullish state with a moderate upward momentum.
The uptrend of the FBM KLCI remained intact as the key index is currently above all the short, medium and long term moving averages. Trading pattern over the last few sessions showed that the market was trading cautiously at the current level, and the bears were actively taking profits whenever the bulls push the key index higher, hence, index-link counters are likely to continue their current cautious trading patterns and the penny stocks are likely to continue their dominance in the active scene.
Overnight, the Dow fell -43.90 points or -0.33% to close at 13,197.73. Today, the FBM KLCI is likely to trade within a range of 1,580 to 1,597.
This week's expected range: 1559 – 1604
Today’s expected range: 1580 – 1597
Resistance: 1591, 1594, 1597
Support: 1580, 1583, 1585
Stocks to watch: MPI, MTRONIC
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