Stocks on Bursa Malaysia ended broadly higher yesterday in tandem with rebound in regional bourses on news that that the European Union is making available an unprecedented loan package of up to 500 billion euros with an additional 250 billion euros from the IMF in attempts to head off further speculation against highly indebted member countries (PIIGS) of the Euro zone.
The benchmark FBM KLCI opened 1.29 point lower, however, it quickly move into positive territory and touched an intra-day high of 1337.20 before last minute profit taking pressed it off-high to close 1.08 point or 0.08% higher at 1333.97. Gainers outpaced losers by 529 to 194 while 217 counters were unchanged. Volume traded was lower at 805 million shares valued at RM 1.309 billion.
Chart wise, the FBM KLCI formed an inverted hammer candlestick which indicates buyers were initially dominant in pushing the index up, but seller later surfaced to sell in down. However, the sellers were not strong enough to send the key index into the negative territory, hence; the buyers were still slightly more dominant.
The FBM KLCI has been able to stay above the 1330 level quite well; however, it still faced considerable resistance when it tries to move higher. Immediate overhead resistances post by the short term moving averages (MA) and the down-gap formed recently is at 1335 to 1342, and the psychological resistance level at 1350 is still a main hurdle for the key index.
MACD continued to slide lower indicating the downward momentum is still in force. RSI(14) at 51.44 has bounced above the 50 level, and is in the neutral zone. Stochastic at 47.53 has hooked up but still below its slow Stochastic indicated a technical rebound. Mixed signals from the indicators indicated that the key index is in a corrective consolidation mode.
The FBM KLCI is in the sideway trend for the short term. The medium to longer term trend, nonetheless, is still up.
Key levels to watch are the immediate support zone at 1330 to 1324, whereas, the immediate overhead resistance zone is at 1340 to 1350.
In view of the strong overnight close of 404 point rise on the DJIA, the local bourse is expected to stage a follow-through rebound today to test higher resistance levels.
Today, the FBM KLCI is likely to trade within a range of 1324 to 1344.
This week's expected range: 1283 – 1367
Today’s expected range: 1324 – 1344
Resistance: 1337, 1340, 1344
Support: 1324, 1328, 1331
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