Stocks on Bursa Malaysia closed higher yesterday, supported by gains in banking and plantation heavyweights. However, investors are taking a cautious stance amid rising oil prices due to unrest in the Middle East as shown by the thin volume. The FBM KLCI was up 7.60 points or 0.5% to close at 1,506.88 after opening 0.47 of a point lower at 1,498.81. Advancers outpaced decliners by 503 to 252 and 307 counters ended flat. Turnover stood at 1.07 billion shares valued at RM1.52 billion, down from the 1.36 billion shares worth RM1.72 billion recorded on Wednesday.
The FBM KLCI opened 0.47 point lower at 1,498.81 but rallied to the intra-day high of 1,512.82 at late morning, and profit-taking activities which surfaced after that pressed the key index lower to close off high at 1,506.88. Chart-wise, the FBM KLCI formed a bullish white candlestick which is a confirmation to the reversal signal of the piercing-line candlestick formed on Wednesday; hence, the key index is likely to continue with its up move to re-test higher resistance levels. Having said so, the FBM KLCI will have to close above the neckline of the head-and-shoulder (H&S) pattern at 1,520 to overcome the threat of the H&S pattern, and above 1,528 to reverse the current downtrend.
MACD has continued to move higher, indicating a gradual reversal of the downward momentum. However, as it is still below its signal-line in the negative territory, the up move could be a technical rebound and may be short-lived. RSI (14) is at 46.1, and has reversed up to move higher into the mildly bearish zone, indicating a gradual pick of the market strength. Stochastic is higher at 49.2, indicating a continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI is gradually moving out of its very bearish condition to gradually turn bullish, and more data is required to confirm this.
The FBM KLCI has now closed above its short term 5 and 10-day moving averages (MA), but is still below its 20 and 30-day MAs. It is still below its medium term 60-day MA, nonetheless, it has closed above the long term 120-day MA. The situation shows that the FBM KLCI is trapped within the short to long term support and resistance zone, and to move higher, it has a lot of resistances to clear. Hence, the FBM KLCI is likely to be range-bound in the near term. Immediate overhead resistance zone is at 1,513 to 1,528, while the downside support zone is at 1,490 to 1,474.
Overnight, the Dow rose +191.40 points or +1.59% to close at 12,258.20. Today, the FBM KLCI is likely to trade within a range of 1,483 to 1,528.
This week's expected range: 1438 – 1540
Today’s expected range: 1483 – 1528
Resistance: 1514, 1521, 1528
Support: 1483, 1490, 1498
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