FBM KLCI - challenging higher resistance

Stocks on Bursa Malaysia closed mixed yesterday tracking the losses on Wall Street overnight. The benchmark FBM KLCI, however, stayed in the positive territory throughout the day with gains on heavyweights like CIMB, BAT and DIGI help lift the index. The benchmark index opened with a gap up of 1.87 points and rose to an intra-day high of 1273.30 before profit-taking trimmed gains to close the day with 4.35 points or 0.34% higher at 1270.78. Losers led gainers by 350 to 303 while 264 counters were unchanged. Volume traded remained low at 650 million shares worth RM1.168 billion.

The FBM KLCI continued its short term uptrend from the rebound to move higher lifted by strong gains in selected blue-chips. The short term trend is now up as indicated by the 5 and 10-day moving averages (MA) that is pointing northeast. The medium term trend has turned sideway while the long term trend is still up.

MACD continued to move higher indicating the gradual gain in market momentum. RSI(14) at 53.9 is moving out of the neutral zone and is gradually turning bullish. Stochastic at 95 has entered the short term overbought zone indicating the index has turned strong for the short term.

The index, however, is met with strong resistance posted by the 30-day MA at the 1273 area. If it can overcome this resistance, it might move higher to re-test the 1280 and 1300 levels.

Today, the FBM KLCI is likely to trade within a range of 1263 to 1278.

This week's expected range: 1240 – 1276
Today’s expected range: 1263 – 1278

Resistance: 1273, 1275, 1278
Support: 1263, 1266, 1268

FBM KLCI - Spinning Top

Stocks on Bursa Malaysia ended mixed yesterday as a lack of fresh leads led investors to lock in gains from previous day’s rally. The FBM KLCI opened in the negative territory and traded in a narrow range of four points throughout the day before closing flat at 1266.43. Gainers led losers by 383 to 267 while 262 counters were unchanged. Volume traded remained low at 664 million shares worth RM1.144 billion. The low volume over the last few days indicated the lack of interest and investors were mainly sidelined waiting for a clearer direction.

The FBM KLCI formed a small body white spinning top candlestick which indicates consolidation and hesitation of the market to move forward, it might also forewarn of a possible market top at current level.

MACD albeit made a golden-cross, but it could be a weak cross, as the MACD is still in its negative zone. RSI(14) is flat, while Stochastic has entered its short term overbought zone.

The FBM KLCI is currently faced with an immediate overhead resistance zone at 1268 to 1277, which is a big hurdle for the index to cross at the moment. The support below is at 1240 to 1250. The 1250 is a critical support level, if the index breaks below it; it might trigger a sell on fear which could see the index plunging to re-test the 1224 support level.

Today, the FBM KLCI is likely to trade within a range of 1255 to 1273.

This week's expected range: 1240 – 1276
Today’s expected range: 1255 – 1273

Resistance: 1268, 1271, 1273
Support: 1255, 1258, 1262

FBM KLCI - higher on breakout

Stocks on Bursa Malaysia ended yesterday firmer, in tandem with gains on regional bourses after DJIA closed higher last Friday. The FBM KLCI opened 2.84 points higher at 1,260.51 and stayed in the positive territory throughout the trading day before closing 8.99 points or 0.7% higher at 1266.44. Market breadth was positive with 469 gainers to 196 losers while 254 counters were unchanged. Volume traded was lower at 600 million shares worth RM1.024 billion.

The FBM KLCI formed a bullish white candlestick breaking out from its correction last Friday to move higher. It has crossed the immediate resistance at 1265 and is poised to challenge the next resistance zone at 1270 to 1280.

MACD has just made a Golden-cross signifying more upside move to come. RSI(14) at 50.88 has just moved into the bullish zone, and Stochastic at 75.9 continued to move higher indicating a continuation of the positive upward move. Signals from the indicators are indicating that there is more positive move to come for the benchmark index.

The FBM KLCI short term trend has turned upward as indicated by the 5-day moving average (MA) which has just crossed above the 10-day MA. The underlying longer term trend is up as indicated by the 120 and 200-day MA that is still strongly pointing up.

Today, the FBM KLCI is likely to trade within a range of 1256 to 1274.

This week's expected range: 1240 – 1276
Today’s expected range: 1255 – 1274

Resistance: 1268, 1271, 1274
Support: 1255, 1258, 1262

FBM KLCI - end of rebound?

Stocks on Bursa Malaysia closed last Friday on a weak note, in tandem with regional bourses following an unexpected move by the US Federal Reserve to raise the discount rate on Thursday night, after Wall Street had closed. The move raised fears that the US monetary tightening might come sooner than expected.

The FBM KLCI gained 4.28 points or 0.34% to close at 1257.67 week-on-week, and the weekly volume dropped to 1.767 billion shares valued at RM3.175 billion from 3.365 billion shares valued at RM5.685 billion the previous week as the local market was closed on last Monday and Tuesday for the Lunar New Year celebration.

On the weekly chart, the FBM KLCI formed a black inverted hammer-like candlestick which indicates weakness that surfaced after a technical rebound. The rebound was weak as the index couldn’t cross above the 10-week moving average resistance at 1271. As it was mentioned in last week’s report, the zone from 1265 to 1277 will form a strong resistance zone to the technical rebound of the index.

Weekly MACD continued to slide southward, indicating the continued weakening of market momentum. Weekly RSI has hooked-up reflecting the rebound, but is in the mildly bullish zone, and weekly Stochastic at 31 has just hook-up but is in the weak zone. The mixed signals of the indicators reflected the corrective mode of the benchmark index, which is mildly bearish.

As the FBM KLCI has comes below the 5 and 10-week moving average, the current short term trend of the index is down. The benchmark index is now trapped in a corrective mode as it is subjected to strong overhead resistance zone at 1265 to 1276 and support zone below from 1240 to 1250. If the index is able to break above 1276, it might trigger a rally towards 1300; however, if it breaks below 1250 it might also triggers a bear move to re-test the recent low of 1224.

For this week, the FBM KLCI is likely to trade within a range of 1240 to 1276, as for today it is likely to trade within a range of 1251 to 1263

This week's expected range: 1240 – 1276
Today’s expected range: 1251 – 1263

Resistance: 1259, 1261, 1263
Support: 1251, 1253, 1255

FBM KLCI - consolidation

Stocks on Bursa Malaysia ended easier yesterday in tandem with regional bourses after a good start to the Lunar New Year. Investors lock in profits after four sessions of rise since before the New Year, with GENTING leading the loser list among the heavyweights. The FBM KLCI opened in the positive territory and traded in a narrow range of 3 points before easing to close 0.07 point or 0.01% lower at 1259. Market breadth was negative throughout the day with losers led gainers by 412 to 233 while 236 counters were unchanged. Volume traded was marginally higher at 598 million shares worth RM998 million.

As it was mentioned in yesterday’s report that the FBM KLCI showed sign of weakness on the occurrence of a shooting-star candlestick the day before, the index continued to be in a profit taking mode yesterday, confirming the earlier signal by forming a black candlestick. Nonetheless, selling pressure was not huge as the body of the black candlestick was small. If the selling pressure in the 1263 to 1265 region can be absorbed, the index might move up further to challenge the higher resistance levels.

MACD continued to move higher in the negative zone with the histogram turning shorter, indicating a continued improvement of the upward momentum in the current downtrend. RSI(14) turned flat at the mildly bearish zone, while Stochastic continued to move up higher. The mixed signals of the indicators reflected the correction mode of the index at current level.

The index might consolidate at current level at it is trapped between overhead resistance zone from 1265 to 1278 and support zone below at 1230 to 1251. A break above 1278 will lead into a bull run, while a break below 1250 may trigger a bear move.

Today, the FBM KLCI is likely to trade within a range of 1253 to 1266.

This week's expected range: 1224 – 1285
Today’s expected range: 1253 – 1266

Resistance: 1261, 1263, 1266
Support: 1253, 1255, 1257

Stock to watch: KPJ

FBM KLCI - moving higher

The Lunar New Year got off to a good start for Asian bourses with stocks on Bursa Malaysia ended higher yesterday taking cue from the rally overnight on Wall Street. The FBM KLCI opened with a gap up at 1256.44 and traded higher to an intra-day high of 1264.91 before profit-taking activities trimmed gains to close 5.68 points or 0.45% higher at 1259.07. Market breadth was positive with 408 gainers to 206 losers while 209 counters were unchanged. Volume traded was lower at 545 million shares worth RM1.017 billion.

Chart wise, the FBM KLCI formed a shooting-star like candlestick which is a reversal signal, however, it requires one more candlestick to confirm the signal. The benchmark index has moved to cover the gap formed on 5th February, but strong profit-taking activities at 1265 level stopped the index from moving further. The index has in the short term turned positive as it has closed above the 10-day moving average, nonetheless, overhead resistance at 1268 to 1278 zone is still a main hurdle to cross before the index turns bullish.

MACD has hooked-up with its histogram turning shorter indicating a gradual pickup in upward momentum. RSI(14) at 45 has move into the mildly bearish zone from the very bearish zone of below 30. Stochastic at 39 continued its up move. The indicators are releasing signals that the index is gradually turning positive even though they are still in their respective negative zone currently.

The FBM KLCI might continue its upward move, but will face strong resistances at 1265, 1272 and 1278 levels. In order for the benchmark index to reverse its current short term downtrend, it will have to move above the 1278 level which is the current level of the 30-day moving average.

Today, the FBM KLCI is likely to trade within a range of 1251 to 1273.

This week's expected range: 1224 – 1285
Today’s expected range: 1251 – 1273

Resistance: 1264, 1268, 1273
Support: 1251, 1254, 1256

Stock to watch: UNISEM

Hammer - possible bottom

Stocks on Bursa Malaysia went through a roller-coastal ride last week, as the benchmark FBM KLCI slid to a four month low on worries over Greece’s debt crisis, liquidity tightening in China and the US employment data. The market rebounded later on grounds that other EU countries are likely to bailout Greece, lower than expected China's inflation and lower-than-estimated US jobless claims.

The FBM KLCI continued its fall on last Monday and hit the intra-week low of 1224.37 on Tuesday before rebounding to close last Friday at 1253.39, making a gain of 5.49 points or 0.44% week-on-week. Daily average volume and value dropped to 673 million shares worth RM1.11 billion, compared with the 883.2 million shares and RM1.25 billion average the previous week.

On the weekly chart, the FBM KLCI formed a bullish hammer candlestick which signified the possible bottom of the current downtrend at 1224 as it found support on the 30-week moving average and might stage a reversal this week. As the index reverses up, it is faced with many resistances at various levels, first is the gap at 1265 and second the 1272 level formed by the 5 and 10-week moving averages.

Weekly MACD continued to slide downward indicating the increased in downward momentum. Weekly RSI at 56.8 has leveled-off and is near neutral. Weekly Stochastic is still heading southward. The signals from the indicators simply reflect the current correction mode of the benchmark index.

Technically, the FBM KLCI might continue its upward move, but is faced with strong resistances at 1265, 1272 and 1278. In order for the benchmark index to reverse its current short term downtrend, it will have to move above the 1278 level which is the current level of the 30-day moving average.

For this holiday-shortened week, the FBM KLCI is likely to trade within a range of 1224 to 1285. For today, it is likely to trade within a range of 1246 to 1265.

This week's expected range: 1224 – 1285
Today’s expected range: 1246 – 1265

Resistance: 1257, 1260, 1265
Support: 1246, 1248, 1251

Stock to watch: 3A, SUPERMX

FBM KLCI - continued to move higher

Stocks on Bursa Malaysia traded in a relatively quiet mode yesterday ahead of the long Lunar New Year holiday. The FBM KLCI was basically trading in a narrow range of about 2 points throughout the day before late hour buying pushed the benchmark index to close 3.25 points or 0.26% higher at 1249.42. Market breadth was negative with losers led gainers by 313 to 276 while 255 counters were unchanged. Volume traded remained low at 646 million shares worth RM881 million compared with 615 million shares valued at RM1.16 billion on Wednesday.

The FBM KLCI formed a hanging-man candlestick which might forewarn of a possible top for the current rebound. The index has closed right below the psychological resistance level of 1250, and right above it is the strong resistance level at 1253 formed by the down gap, which happened to coincide with the 10-day MA resistance. If the index is able to break through the resistance at 1253, then it might move up further to challenge the next level of resistance at 1263.

MACD has turned flat, and the histogram is also getting shorter signifying the reduction in downward momentum. It, however, is still in the negative zone reflecting the technical rebound of the index in a prevailing downtrend. RSI continued to move higher but is still in the bearish zone. Stochastic at 22 has just come out of the very weak zone.

The prevailing short term trend of the FBM KLCI is down, any up move is technically considered a rebound, if the rebound failed, then the index might continued its southward journey to retest the recent low of 1224. For the index to reverse its downtrend, it would have to close above 1268.

Today, the FBM KLCI is likely to trade within a range of 1241 to 1255.

This week's expected range: 1220 – 1288
Today’s expected range: 1241 – 1255

Resistance: 1251, 1253, 1255
Support: 1241, 1243, 1246

Stock to watch: AXIATA

Technical rebound

Stocks on Bursa Malaysia rebounded to close higher yesterday taking cue from Wall Street’s 150 points rally overnight, following reports that Germany was considering a rescue package for Greece. The FBM KLCI opened with a gap up of 6 points and traded higher to close 12.31 points or 1% higher at 1246.17, with buying interest on heavyweights especially the banking stocks. Market breadth was positive with advancers led decliners by 390 to 254 while 241 counters were unchanged. Volume was lower at 615 million shares worth RM1.16 billion. For the next two trading days, volume is likely to stay low due to the long break for the Chinese New Year.

As it was pointed out in yesterday’s report, the FBM KLCI rebounded to the resistance zone of 1245 to 1250. The rise of the index could well be just a technical rebound which could be short lived, as the short term trend, indicated by the 10-day moving average is still pointing downward.

MACD has turned flat, indicating a slow down in the downward momentum. RSI(14) at 36 has hooked up, but is still in the bearish zone. Stochastic at 13 has just crossed its slow Stochastic, is still in the very weak zone. Hence, the up move of the index could be fragile and is vulnerable to external negative factors.

For the index to reverse its short term downtrend, it would have to close above the 10-day MA at 1255.

Today, the FBM KLCI is likely to trade within a range of 1234 to 1255.

This week's expected range: 1220 – 1288
Today’s expected range: 1234 – 1255

Resistance: 1249, 1252, 1255
Support: 1234, 1237, 1241

FBM KLCI - hammer and temporary bottom

Stocks on Bursa Malaysia recovered to close off lows in the afternoon yesterday on advances in major Asian markets as global sentiment improved in anticipation that European authorities will step in to reduce the impact of budget deficit concerns in the region.

The FBM KLCI had earlier fallen by as much as 10.85 points to the intra-day low of 1224.38 before recovering to close 1.36 points or 0.11% lower at 1233.86. Market breadth was negative with losers led gainers by 345 to 293 while 269 counters were unchanged. Volume was marginally higher at 773 million shares worth RM1.515 billion.

Chart wise, the FBM KLCI formed a hammer-like candlestick which is a bottom reversal signal. It indicates that a temporary bottom is found at the 1224 level, and the index might rebound further. However, as the short term trend is down, the index will have to face many resistances as it rebound, it will have to cross two major resistances at 1245 and 1250.

MACD continued to slide down indicating the increase in downward momentum. RSI (14) at 25 indicates a bearish market for the short term, and Stochastic at 4.8 is deeply oversold for the short term, and the market might stage for a rebound.

The benchmark FBM KLCI has in the short term turned bearish, whether it can successfully make a reversal or continue the downtrend would very much depends on the external factors. The underlying long term trend is, however, still up.

Today, the FBM KLCI may trade within a range of 1220 to 1245.

This week's expected range: 1220 – 1288
Today’s expected range: 1220 – 1245

Resistance: 1237, 1241, 1245
Support: 1220, 1227, 1231

FBM KLCI - downtrend continued

Stocks on Bursa Malaysia ended broadly lower yesterday in tandem with weakness on regional bourses. The FBM KLCI opened in the red and traded lower through the day to close 12.68 points or 1.02% lower at 1235.22, its lowest level since Oct 13 2009. Decliners outpaced advancers by 608 to 119 while 215 counters were unchanged. Volume dipped lower at 769 million shares worth RM1.316 billion.

Chart wise, the FBM KLCI formed a bearish long black candlestick which indicates sellers are in control, where 22 stocks declined and 5 stocks rose on the 30 member benchmark index, and the index may fall further.

As the FBM KLCI has breached the 120-day moving average (MA), it might fall further to test the 200-day MA support at 1177. Immediate support of the FBM KLCI is found at 1231 and 1220 level, if these two levels are not defended, the index will visit the 1200 psychological support level.

The indicators, MACD, RSI and Stochastic are all in a bearish mode reflecting the current weak market conditions.

Today, the FBM KLCI may trade within a range of 1220 to 1253.

This week's expected range: 1220 – 1288
Today’s expected range: 1220 – 1253

Resistance: 1251, 1255, 1258
Support: 1220, 1226, 1231

FBM KLCI - might see further downside

Stocks on Bursa Malaysia went through a second week of correction taking cue from the weak performances of the US and regional bourses, spurred by worries about sovereign debt woes in the Euro zone and tightening of liquidity in China, on top of the rising unemployment data in the US.

Share prices on Bursa Malaysia ended lower last Friday with the key barometer FBM KLCI falling to its lowest point since November 4 last year to close the first week of February 11.26 points or 0.89% lower at 1247.90, dragged down by losses in heavyweights. Weekly turnover dropped to 3.33 billion shares worth RM4.99 billion from 5.23 billion shares worth RM7.66 billion the previous week.

On the weekly chart, the FBM KLCI formed a bearish black inverted hammer candlestick indicating there might be further downside. The benchmark index has now comes below its 10-week moving average confirming its short term down trend.

Weekly MACD continued its downslide, indicating the weakening of momentum. Weekly RSI at 55 has comes into the neutral zone, and weekly Stochastic at 47 has turned weak. Weaknesses of the indicators indicated that there might be further downside on the key index.

The fact that the index has closed below the psychological support of 1250 on last Friday may trigger further panic selling in the heavyweights.

Immediate support of the FBM KLCI lies at the 1230 to 1244 level. If these two levels are breached, one may see the index sliding further southward. The downside target would be the 1197 to 1200 level which is the 23.6% Fibonacci retracement of the total length from the low of March 2009 to the high of 1308 registered on Jan 21, 2010; and a 38.2% retracement would mean a downside target of 1128.

From the weekly chart perspective, the FBM KLCI is into its correction mode and may continue to further consolidate for the short term. The longer term trend as indicated by the long term moving averages is still up. In fact, one should view the current correction as an opportunity to accumulate quality stocks at lower level. The medium to longer term target for the FBM KLCI of 1350 to 1400 is still intact.

For this week, the FBM KLCI is likely to trade within a range of 1220 to 1288. As for today, it may trade within a range of 1238 to 1258.

This week's expected range: 1220 – 1288
Today’s expected range: 1238 – 1258

Resistance: 1251, 1255, 1258
Support: 1238, 1241, 1245

Tiger years typically marked by dramatic changes

An interesting report for your reading pleasure, enjoy it!

HONG KONG: The Dow Jones Index gained significantly in the previous year of the Golden Tiger in 1950, but Tiger years are typically marked by dramatic changes and even upheaval, said CLSA Asia-Pacific Markets in its 16th CLSA Feng Shui Index (CLSA FSI).

In the report with a tongue-in-cheek look at what 2010 held for equities, commodities, property, celebrities, and the zodiac signs in the months ahead, CLSA cautioned investors to view 2010, much like the tiger itself, as an energetic and powerful, but impulsive and risky, year ahead.

“Those trading equities should get set to ride the wild tiger. The markets will be volatile with a surge in the first month followed by a decline that turns upwards in June, dips, and then swings up again in September to see the Golden Tiger roar by January 2011,” it said in a statement.

With this Tiger year’s heavenly stem being metal, CLSA said gold was set to have a great run and it predicted that it could break US$2,000 (RM6,820) per ounce.

“In fact, commodities of all stripes will fare well including silver, copper, zinc and aluminium. Those regarded as ‘wood’ will also do very well: pulp and paper, clothing and pharmaceuticals.

“‘Fire’ and ‘earth’ elements, thus technology, power, telecoms and property will have a good year but ‘water’ related sectors will be challenged, translating to a bumpy time for shipping, airlines, logistics, autos and transport,” it said.

The following is CLSA’s month-by-month take on the year.

• February would bring fantastic opportunities for those sharp enough to recognise them and fast enough to grab them.

• March signals the start of three bumpy months, but there’ll be no shortage of good trades for those brave enough.

• In April, the influence of the stars of misfortune is especially disruptive, while the first few weeks of May will be feisty.

• June heralds a great month but maybe not the best for betting, although the June 21 summer solstice is especially auspicious and gold may surge.

• July is more relaxed with time to enact long-cherished plans and projects.

• August sees the return of volatility and precious metals look set to break upwards, especially gold, silver and copper.

• In September, the trend is upwards and a mixture of considered and idle speculations offers the possibility of eye-popping returns.

• October is possibly one of the best months of the year, with life returning to the markets. It marks the return of a sustained drive upwards that continues into November, December and January.

• Each of the last three months features an auspicious date; Nov 17, Dec 8, Jan 16.

• In terms of the Zodiac, a great year lies ahead for those born in the years of the Dragon, Sheep and particularly, the Horse. A relatively good year is in store for Rats, Cows, Rabbits, Roosters, Dogs and Pigs, while it will be a bumpy ride for Tigers, Snakes and Monkeys,” it said.

CLSA said the Golden Tiger year would favour China’s wealthiest woman, Nine Paper’s Zhang Yin, a Rooster in the Chinese zodiac.

“She will take on some of the toughest competition of her career and come out on top. For China’s wealthiest man, BYD CEO Wang Chuanfu, a Horse, the sun will continue to shine as it has since Warren Buffett invested into his company and set the price soaring.

“And for Buffett, also a horse, the future looks just as bright. He is about to enter the most financially lucky period of his life. Expect some significant and unusual developments in Berkshire Hathaway’s already substantial interest in China,” it said.

“As the Chinese saying goes: ‘Once on a tiger’s back, it is hard to get off’. But if you can hang on, it is certainly the safest place to be. Enjoy the ride and Happy New Year.”


This article appeared in The Edge Financial Daily, February 4, 2010.

FBM KLCI - might further correct

Stocks on Bursa Malaysia ended broadly lower yesterday as weaknesses on regional bourses and Wall Street overnight weighed down sentiments. The FBM KLCI opened in the positive territory but turned negative soon after and traded 2.12 points or 0.17% lower to close at 1265.03. Losers outpaced gainers by 446 to 216 while 252 counters were unchanged. Volume was lower at 620 million shares worth RM992 million.

Chart wise, the FBM KLCI formed a small black candlestick which indicates consolidation with a downward bias. MACD continued to slide downward and is below its zero line indicating weakness in the short term. RSI at 38 has again hooked downward and is in the bearish zone. Stochastic continued to stay in the oversold or very weak zone.

With all the weaknesses indicated, the FBM KLCI might continue to consolidate or fall further. In the case if it continues to dip southward, the next lower targets will be the recent low at 1253 and 1244 of the 120-day moving average support.

Today, the FBM KLCI is likely to trade within a range of 1253 to 1270.

This week's expected range: 1225 – 1287
Today’s expected range: 1253 – 1270

Resistance: 1267, 1269, 1270
Support: 1253, 1255, 1260

FBM KLCI - technical rebound continued

Stocks on Bursa Malaysia ended higher for the second day, taking cue from Wall Street’s overnight gains and higher regional markets. The FBM KLCI opened higher, but soon slipped into the red and fluctuated in a tight range before late buying lifted the index to close 3.39 points or 0.27% higher at 1267.15. Market breadth was positive throughout the day with gainers led losers by 458 to 222 while 248 counters were unchanged. Volume was lower at 865 million shares worth RM1.131 billion.

Chart wise, the FBM KLCI continues its technical rebound for a second day after the recent sell down, it formed a small white candlestick which indicates cautious up move which lacks momentum.

MACD continued to move lower but its histogram is shorter indicating a reduced in downward momentum. RSI at 40 is still in the bearish zone. Fast Stochastic has just crossed its slow Stochastic but is still below 20. Overall, the indicators are reflecting a weak market conditions.

The short term trend is down as indicated by the short term moving averages, while the longer term trend, nonetheless, is still up. On its up move, the index is faced with a strong resistance zone at 1270 to1280 level, while its immediate support now lies at 1253 to 1260. If the 1253 level is breached, the index may fall further to test its next critical support at 1240.

Today, the FBM KLCI is likely to trade within a range of 1259 to 1273

This week's expected range: 1225 – 1287
Today’s expected range: 1259 – 1273

Resistance: 1269, 1271, 1273
Support: 1259, 1261, 1264

Stock to watch: AFFIN

FBM KLCI - technical rebound

Stocks on Bursa Malaysia ended slightly higher on the first trading day of February as overnight gains on Wall Street and positive economic news from the United States helped lift market sentiment. The FBM KLCI opened with a gap up and traded in the positive territory for the whole day, it gained as much as 9 points on an intra-day high of 1268.21, but profit-taking on heavyweights trimmed gains, the index ended 4.6 points or 0.36% higher to close at 1263.76. Market breadth was positive with gainers led losers by 359 to 347 while 251 counters were unchanged. Volume was lower at 928 million shares worth RM1.345 billion.

As it was mentioned in yesterday’s report, the rebound of FBM KLCI was expected. The price action of the benchmark index formed a white candlestick with long upper shadow which indicates strong profit-taking during the day. The reversal of the index may well be just a technical rebound after six day of continuous fall in late January; it is still vulnerable to any less positive news and will follow the direction of regional bourses.

On the indicators, MACD has crossed below its zero line, indicating a medium term correction. RSI at 37 has hooked up slightly but still in the bear territory and Stochastic at 12 too has reversed up but still within its very weak or oversold zone.

The FBM KLCI may continue its rebound but upside is capped at the strong resistance zone of 1270 to 1280 level for the time being.

Today, the FBM KLCI is likely to trade within a range of 1253 to 1275

This week's expected range: 1225 – 1287
Today’s expected range: 1253 – 1275

Resistance: 1268, 1271, 1275
Support: 1253, 1257, 1260

FBM KLCI - Bad end for Jan 2010

Stocks on Bursa Malaysia went through a consecutive five days of down slide on the last week of January 2010 in tandem with weakness on regional bourses, which was due to China's monetary policy tightening coupled with the proposal by the Obama administration to limit risk-taking by banks in the United States. Locally, Bank Negara Malaysia kept the overnight policy rate at two per cent but hints of a possible review to avoid financial imbalances, had affected the banking stocks heavily.

The FBM KLCI ended January on a weak note, shedding 41.29 points to 1259.16 from the previous week’s close of 1300.45. It formed a bearish long black candlestick on the weekly chart which pierced right through the 10-week moving average (MA) which has all this while given support to the uptrend since April 2009; hence, further weakness is expected on the benchmark index for the short term.

The FBM KLCI is resting right on the 20-week MA (a 100-day MA equivalent) and may find some support around it. If the current support level at 1250 does not hold, then the index may visit the next lower support provided by the 30-week MA at 1228.

Weekly MACD has widened downward, indicating possible further weakness ahead. Weekly RSI made a sharp dropped to 58.9 from 74 the previous week, indicating the weakening of market strength, and entering to the neutral zone. The weekly Stochastic at 72.8 has crossed below the 80 mark, indicating possible further downward slide.

From the weekly chart perspective, the FBM KLCI has started its correction and may continue to further consolidate for the short term. The longer term trend as indicated by the long term MA is still up and unspoiled. In fact, one should view the current correction as an opportunity to accumulate quality stocks at lower level. The medium to longer term target for the FBM KLCI of 1350 to 1400 is still intact.


On the daily chart, the index formed a white hammer-like candlestick on last Friday, which indicates a temporary bottom and possible reversal. It may stage a technical rebound, however, it will face strong overhead resistance at the 1275 to 1282 zone.

Daily technical indicators are reflecting the weakness of the FBM KLCI. However, it is worth while to point out that the Stochastic at 8.3 has entered the short term oversold zone. As can be seen from the past, a successful rebound from here has brought the index to a higher level.

For this week, the FBM KLCI is likely to trade within a range of 1225 to 1287. As for today, it may trade within a range of 1248 to 1268.

This week's expected range: 1225 – 1287
Today’s expected range: 1248 – 1268

Resistance: 1262, 1265, 1268
Support: 1248, 1250, 1255