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
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