Stocks on Bursa Malaysia ended higher yesterday despite the weaker regional markets, helped by gains in banking and plantation stocks. The regional sentiment was affected by concern over Spain’s struggling banks and the country’s rising borrowing costs, with charts pointing to more gloom ahead, and indications that China might adopt a cautious approach in stimulating its economy also prompted investors to sell equities. The FBM KLCI closed 9.85 points or 0.63% higher at 1,575.17 after opening 2.89 points higher at 1,568.21. Gainers led losers by 378 to 331 while 318 counters were unchanged. Turnover rose to 920.86 million shares worth RM1.25 billion from 756.53 million shares worth RM984.41 million on Tuesday.
Taking cue from the strong performance of the Dow overnight, the FBM KLCI opened with an up gap of 2.89 points at 1,568.21 and slipped to the intra-day low of 1,564.60 on profit-taking activity, and moved sideways. The key index broke out from its sideways range in the afternoon and rallied to the intra-day high of 1,578.28 before pulling back to close off high. Chart-wise, the FBM KLCI formed a bullish white candlestick which continued its previous uptrend. With the up move yesterday, the key index managed to close the gap area at 1,571 to 1,575 but was not able to get through the resistance at 1,579 posted by the 50 and 60-day SMA. If the FBM KLCI is able to clear the resistance at 1,579, it might run up to the next target level of 1,591, otherwise, it may pull back to consolidate after five consecutive days of gains.
MACD was higher and so is the histogram, indicating a continued increase in the upward momentum. Nevertheless, as the MACD is still below the zero-line, the current up move may just be a technical rebound in a bigger downtrend. MACD will only turn bullish if the FBM KLCI is able to close above 1,580-point level. RSI (14) was higher at 55.1 from 50.4 previously, indicating the short term relative strength of the FBM KLCI had turned mildly bullish. Stochastic was higher at 60.5, indicating a continued improvement of the market strength and continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI has gradually turned mildly bullish, and there are still rooms for improvement.
With the strong upward move yesterday, the FBM KLCI has broken out of the downtrend channel as well as closing above the 30-day SMA, indicating the short term trend has reversed up. Nonetheless, the key index is still below the medium term 50 and 60-day SMAs, if only the FBM KLCI is able to close above this two medium term moving averages, the benchmark index would again turn bullish, and the long term trend still remained up. Immediate overhead resistance zone is at 1,578 to 1,591 while the downside support zone is at 1,565 to 1,550.
Overnight, the Dow fell -160.83 points or -1.28% to close at 12,419.86. Today, the FBM KLCI is likely to trade within a range of 1,553 to 1,592.
This week's expected range: 1517 – 1573
Today’s expected range: 1553 – 1592
Resistance: 1581, 1587, 1592
Support: 1553, 1559, 1567