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Thursday, March 15, 2012

FBM KLCI - staged a strong rebound


Stocks on Bursa Malaysia rebounded yesterday with the FBM KLCI staying above the 1,575 points level buoyed by external developments in the United States and the Euro zone. Stronger-than-expected retail sales in the US and comments from the Federal Reserve that financial market strain was easing, as well as, news that most US banks passed their annual stress test lifted global equity markets. The FBM KLCI ended 11.69 points or 0.75% higher at 1,575.71 after opening 6.04 points better at 1,570.06. Gainers overwhelmed losers by 444 to 334 while 356 counters were unchanged. Some 1.273 billion shares, worth RM1.845 billion, changed hands compared with 1.163 billion shares, worth RM1.471 billion, registered on Tuesday.

Taking cue from the strong performance of Wall Street overnight, the FBM KLCI opened with an up gap of 6.04 points at 1,570.06 and climbed to the morning session high of 1,575.04. However, heavy profit-taking pressed the key index to the intra-day low of 1,568.41 before late buying of selected blue-chips lifted it to close at the highest point of the day. Chart-wise, the FBM KLCI formed a bullish white candlestick which staged a reversal after two days of bashing by the bears, and the key index is likely to continue its upward momentum to move higher today. Immediate overhead resistance is expected at the pivot high of 1,582.

MACD was marginally lower, but the histogram was slightly shorter upward, indicating a slow down in the bearish momentum. RSI (14) hooked upward to 58.6, indicating the short term relative strength has improved to become mildly bullish. Stochastic continued to slide lower but showed sign of tapering off, indicating a slow down in the downward momentum. Readings from the indicators showed that the FBM KLCI is still in a consolidation mode but already showed initial sign of a possible changed in momentum.

With the strong rebound yesterday, the FBM KLCI had closed above the short term 5 and 20-day SMA but is still below the 10-day SMA which is currently at 1,577.30, and a cross above this level will likely see the key index moving higher to re-test the next resistance level at 1,582. For the short term, the FBM KLCI is likely to continue to move sideways range-bound until a clear breakout of the pivot high at 1,594.72 is observed. Nevertheless, the medium and long term uptrend still remained intact. Since the school holiday started, the volume has reduced drastically and it is likely to remain in the same level as of now.

Overnight, the Dow gained +16.42 points or +0.12% to close at 13,194.10. Today, the FBM KLCI is likely to trade within a range of 1,563 to 1,583.

This week's expected range: 1547 – 1617
Today’s expected range: 1563 – 1583

Resistance: 1579, 1581, 1583
Support: 1563, 1565, 1570

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