Stocks on Bursa Malaysia ended broadly higher yesterday amid rising confidence of a rescue plan to combat the Euro zone debt crisis. Strengthening investors’ confidence in European leaders who are nearing a plan to tame the debt crisis lifted world equity markets, which supported the local bourse. The FBM KLCI rose 16.37 points or 1.15% to close at 1,444.87 after opening 3.19 points higher at 1,431.69. Advancers led decliners by 677 to 174 while 233 counters were unchanged. Volume rose to 1.506 billion shares, worth RM1.957 billion, from Wednesday’s 1.079 billion shares worth RM1.296 billion.
Taking cue from the strong performance on Wall Street overnight, the FBM KLCI opened with an up gap of 3.19 points at 1,431.69 and climbed to the intra-day high of 1,445.43 at late afternoon. It was hovering between 1,438 and 1,445 for majority of the day. Chart-wise, the FBM KLCI formed a bullish white candlestick which indicates that the bulls were in control. However, intra-day chart showed that the key index faced strong resistance at 1,445-point level. With the bullish up move yesterday, the FBM KLCI is likely to move higher today to test the psychological resistance level of 1,450.
MACD was higher, indicating a continued improvement in the upward momentum. However, as it is still below the zero-line, the broader picture is still bearish, and the current uptrend may just be a bear market rally. RSI (14) was higher at 58.8, is still in the mildly bullish zone, and indicates an improvement in the short term relative strength to the positive side. Stochastic continued to climb higher to 98.9, indicating a very strong market strength and continuation of the up cycle, nonetheless, it was deep into the short term overbought zone. Readings from the indicators showed that the FBM KLCI is turning bullish for the short term, but the overbought situation on the stochastic may forewarn of an impending pullback correction.
The short term trend of the FBM KLCI is currently up, while the medium and longer term trend remained down. The key index was closing above all the short term moving averages (MA) but remained below the medium to long term MAs. Immediate overhead resistance zone is at 1,447 to 1,466 posted by the medium term 50 and 60-day MAs, while the immediate downside support zone is at 1,430 to 1,420. As the volume continued to grow above the 1 billion shares mark, the overall market is likely to remain active with second and third liners doing a catch up. Overnight, the Dow fell -40.72 points or -0.35% to close at 11,478.13. Today, the FBM KLCI is likely to trade within a range of 1,420 to 1,460.
This week's expected range: 1336 – 1452
Today’s expected range: 1420 – 1460
Resistance: 1450, 1455, 1460
Support: 1420, 1425, 1435
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