Stocks on Bursa Malaysia ended firmer yesterday with heavyweight blue-chip stocks making strong gains after recent sell-down. The FBM KLCI opened higher and stayed in the positive territory throughout the day to end 15.85 points or 1.25% higher at 1285.01. Nevertheless, the benchmark index was down 4.56% for the month of May. Gainers led losers by 364 to 306 with 242 counters traded unchanged. Volume declined to 760 million shares valued at RM1.467 billion from 864 million shares valued at RM1.240 billion last Thursday.
The FBM KLCI staged a follow-through technical rebound after opening 7.27 points higher and ended near the highest point for the day. Chart wise, it formed a bullish white candlestick which indicates the bull was in control. The key index may continue to move higher today, however, it is faced with the immediate overhead resistance zone at 1290 to 1300, which was the gap area formed six days ago, and the 120-day moving average at 1297 will also post as a strong resistance to the rebound.
MACD has turned up, indicating a reverse in the downward momentum caused by the technical rebound. RSI(14) at 39.9 continued to move higher after touching the deeply oversold state three trading days ago. Stochastic at 22 has crossed above the oversold level and may continue to move higher. Signals from the indicators are pointing towards a technical rebound for the FBM KLCI.
The short term trend of the FBM KLCI is still down, as the up-move over the last two days was just a technical rebound which could be short-lived. If only the key index can clear the resistance zone at 1290 to 1300 and stay above the 1300 level, then the short term down trend is considered reverse up. The underlying long term trend of the key index is, however, still up.
Looking forward, in view of a lack of fresh leads locally, with the Europe debt crisis still unsettled and the rising tension in the Korean Peninsular, the FBM KLCI may consolidate at the current level of 1250 to 1300 before any strong up-move can take place. The downside support still lies at 1250 to 1243.
The US market was closed for a holiday yesterday. Today, the FBM KLCI is likely to trade within a range of 1267 to 1300.
This week's expected range: 1208 – 1305
Today’s expected range: 1267 – 1300
Resistance: 1289, 1295, 1300
Support: 1267, 1276, 1280
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