Stocks on Bursa Malaysia ended higher yesterday, buoyed by strong buying interest in selected blue-chips, pushed the benchmark FBM KLCI to close at a new two-and-a-half-year high at 1475.99, gaining 6.3 points or 0.43%. The unveiling of the government's Economic Transformation Programme (ETP) yesterday, aimed at boosting Malaysia's economy at 6% every year between 2011 and 2020, boosted market sentiment. Gainers led losers by 368 to 345 while 319 counters were unchanged. Turnover was higher at 1.049 billion shares, worth RM1.513 billion, from 850 million shares, worth RM1.381 billion on Monday.
The FBM KLCI opened 1.46 points higher at 1471.15 and surged to the intra-day high of 1479.59 within the first half-an-hour, the same resistance level registered on last Friday, and heavy profit-taking activities sent the key index down to the intra-day low of 1471.03. Buying interest on selected blue-chips which surfaced in late afternoon helped lift the key index to close 6.3 points higher at 1475.99. Chart-wise, the price action of the key index formed a bullish white candlestick which confirmed the reversal signal generated by the Hammer-like candlestick formed on Monday. The index is likely to continue moving higher; nonetheless, the level at 1479.59 is a major resistance to cross before it can chart new high.
MACD continued to move higher, but at a slower pace, as shown by the shorter histogram, which indicates a reduction in the upward momentum. RSI(14) at 81.4 is climbing marginally higher, indicating a very bullish undertone of the benchmark index, albeit in the overbought zone. Stochastic at 88.45, however, continued to slide lower, indicating a gradual loss in market strength. Signals from the indicators are indicating a bullish undertone of the FBM KLCI, with a gradual loss in upward momentum, and a correction is imminent.
The underlying trend of the FBM KLCI remained very bullish as indicated by the index staying above all the short, medium and long term moving averages that are all pointing northeast. Immediate support zone now lies at 1450 to 1465, while the overhead resistance zone remained at 1480 to 1500. As the market undertone is still very bullish, any correction should be viewed as an opportunity to accumulate quality stocks at lower price level. The market is likely to be in rotational play for the next three weeks until the budget 2011 announcement on October 15.
Overnight, the Dow rose +7.41 points or +0.07% higher to close at 10,761.03. Today, the FBM KLCI is likely to trade within a range of 1463 to 1488.
This week's expected range: 1403 – 1520
Today’s expected range: 1463 – 1488
Resistance: 1480, 1484, 1488
Support: 1463, 1467, 1471
Stock to Watch: KENCANA, SAPRES, TGUAN, XINQUAN
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