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
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