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Wednesday, July 7, 2010

FBM KLCI - higher on technical rebound


Stocks on Bursa Malaysia rebounded yesterday after sliding for six consecutive days, taking cue from the rebound in regional bourses. The FBM KLCI closed 7.58 points or 0.6% higher at 1307.08, after opening 2.19 points lower at 1297.31. Gainers outnumbered losers by 406 to 195 while 272 counters remained unchanged. Volume increased to 622 million shares valued at RM970 million, against Monday's 449 million shares worth RM717 million.

The FBM KLCI opened 2.19 points lower at 1297.31 and traded upward gradually in the morning session albeit in the negative territory. The benchmark index turned positive in the afternoon session and rallied to close near the highest point for the day, forming a bullish engulfing candlestick, which is a strong bottom reversal signal. It should continue its upward move today; however, it may encounter strong overhead resistance at the 1315 to 1320 level. Its immediate support lies at 1300 to 1304, provided by the 30 and 120-day MA respectively.

MACD continued to slide lower, indicating the downward momentum is still in force. RSI(14) at 48 has hooked up, but is still in the bear zone. Stochastic at 21 has reached the short term oversold level, is tapering off, and might stage a technical rebound.

Even though the FBM KLCI staged a rebound yesterday, nonetheless, the benchmark index is still in a short term downtrend, and the rebound could be short-live. However, the longer term uptrend still remained intact.

In view of a lack of market moving impetus at the local front, the key index is expected to continue taking cue from the performance of regional bourses. Overnight, the Dow closed +57.14 or +0.59% higher at 9,743.62. Today, the FBM KLCI is likely to trade within a range of 1290 to 1319.

This week's expected range: 1260 – 1341
Today’s expected range: 1290 – 1319

Resistance: 1311, 1315, 1319
Support: 1290, 1298, 1303

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