Stocks on Bursa Malaysia rebounded to end firmer yesterday in tandem with the rise in regional markets, as strong gains on Wall Street last Friday helped spur buying on the local bourse. The benchmark FBM KLCI closed 13.52 points or 0.93% higher at 1464.71 led by gains in CIMB, MAYBANK, and IOICORP. Gainers led losers by 469 to 292 while 276 counters were unchanged. Turnover stood at 1.158 billion shares, worth RM1.623 billion, up from last Friday's 1.727 billion shares worth RM1.531 billion.
Taking cue from the hefty rise of the DJIA last Friday, the FBM KLCI opened with an up gap of 7.54 points at 1458.73. Mild profit-taking sent the index to its intra-day low of 1456.30 but strong buying support pushed the key index to its intra-day high of 1467.18 before easing to close at 1464.71. Chart-wise, the FBM KLCI formed a bullish white candlestick which confirmed the reversal signal of the Doji star pattern that formed last Friday.
The FBM KLCI actually retreated when it hit the resistance zone at 1463 to 1465 posted by the 5 and 10-day moving averages (MA) as was mentioned in yesterday’s analysis, and the key index is closing right below these two short term MAs. If the key index is able to close above 1467 today, then there is a high likelihood that it will move higher to re-test the resistance zone at 1470 to 1480.
MACD continued to slide lower after making the “dead-cross” last Thursday, indicating the correction is not over yet, and the rebound yesterday could be short-lived. RSI(14) at 66 has hooked up in tandem with the rebound, is still in the bullish zone. Stochastic at 57.6 continued to slide lower indicating the down cycle is not over yet. Signals from the indicators are indicating the current correction is not over yet, and the key index is likely to remain in a range-bound situation.
The 5-day MA has just crossed below the 10-day MA, indicating the short term trend is beginning to turn southward, unless the key index is able to close above 1467, only then the downtrend might reversed up. The medium to longer term underlying uptrend remained intact for the moment. The FBM KLCI is expected to remain in a range-bound situation with the overhead resistance zone at 1470 to 1480 while its immediate support zone lies at 1440 to 1450. The overall market is expected to remain active with rotational play on lower liners while heavyweight counters consolidate.
Overnight, the Dow fell -48.22 points or -0.44% lower to close at 10,812.04. Today, the FBM KLCI is likely to trade within a range of 1447 to 1478.
This week's expected range: 1403 – 1514
Today’s expected range: 1447 – 1478
Resistance: 1469, 1474, 1478
Support: 1447, 1451, 1458
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