Stocks on Bursa Malaysia closed broadly higher yesterday led by finance stocks on reports of positive response to the new banking sector guidelines and a firmer Ringgit. Buying across-the-board intensified as the underlying sentiments remain bullish, with Genting and Public Bank topping the gainers' list. The benchmark FBM KLCI index gained 17.48 points or 1.20% to close at 1,474.44, a record for the year and last seen 32 months ago in January 2008. Gainers outnumbered losers by 503 to 274 while 270 counters were unchanged. Turnover advanced to 1.040 billion shares worth RM2.127 billion from Monday's 843 million shares worth RM1.991 billion.
The FBM KLCI opened 0.66 points higher at 1457.62 and continued to move higher throughout the day with intermittent mild intra-day profit-taking, however, buyers were in full-charged, which pushed the key index to close at the highest level for the day. Chart-wise, the key index formed another bullish Marubozu candlestick which indicates the bulls were in full control of the day. However, the appearance of an overly bullish candlestick near the top may be a sign of pushing up for distribution, hence, beware of the bear.
MACD continued to surge higher, indicating the upward momentum remained very strong. RSI(14) at 86.4 is seriously overbought but also indicates the index is extremely bullish, this reading of RSI for the FBM KLCI was last seen in February 8, 2007, may forewarn of an imminent correction, and the index may continue to move higher after the correction. Stochastic at 97.9 continued to move higher, indicates the short term up cycle continued to remain strong. Signals from the indicators are indicating an overly bullish state of the FBM KLCI, and a correction is expected ahead.
The underlying uptrend of the FBM KLCI remained very strong as indicated by the index staying above all the short, medium and long term moving averages that are all pointing northeast. A pullback correction to the overbought situation is expected to take place; however, it should be viewed as an opportunity to further accumulate quality stocks at lower price level.
Overnight, the Dow fell -17.64 points or -0.17% lower to close at 10,526.49. Today, the FBM KLCI is likely to trade within a range of 1445 to 1492.
This week's expected range: 1412 – 1490
Today’s expected range: 1445 – 1492
Resistance: 1480, 1486, 1492
Support: 1445, 1451, 1463
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