Stocks on Bursa Malaysia closed broadly higher yesterday after two days of selling, underpinned by strong buying in selected blue chips, as overnight gains on the US equity indices and regional markets improved appetite for higher risk. The FBM KLCI rose 14.29 points or 1.05% to 1,375.67 after opening 3.41 points higher at 1,364.79. Overall market sentiment was positive with gainers leading losers by 435 to 247 while 263 counters were unchanged. Turnover was lower at 697 million shares worth RM1.089 billion compared with 795 million shares worth RM1.237 billion on Tuesday.
Taking cue from the overnight gains on Wall Street, the FBM KLCI opened 3.41 points higher at 1,364.79 and surged to the morning session high of 1,374.64 within the first fifteen minutes, and profit-taking activity kept the index in a sideways range. The afternoon session saw the key index climbed to the intra-day high of 1,379.12 but eased back to close off high at 1,375.67. Chart-wise, the FBM KLCI formed a bullish white candlestick which indicates the bulls were in control for the day. The bullish up move indicates a reversal after two days of consecutive declines, and is likely to continue to move higher today. Immediate overhead resistance zone is at 1,380 to 1,400.
MACD has turned upward and made a golden cross above the signal-line, issuing a buy signal. Nonetheless, as the MACD is still below the zero-line, the current upturn may well be just part of a technical rebound within a major downtrend. RSI (14) hooked upward to 38.6, indicating an improvement in the short term relative strength even though it is still in the bearish zone. Stochastic was at 40.9, and has turned flat, indicating a pause in the downward move. Readings from the indicators showed signs of the FBM KLCI turning positive.
The main trend of the FBM KLCI remained down. However, the price action of the key index yesterday showed sign of reversal, as it was closing above the short term 10-day moving average (MA). With follow through buying, the FBM KLCI is likely to move higher to test the 20-day MA which is currently at 1,405. Nonetheless, in order to reverse the downtrend, the key index must at least close above the 1,420-point level. Overnight, the Dow rose +131.24 points or +1.21% to close at 10,939.95. Today, the FBM KLCI is likely to trade within a range of 1,352 to 1,394.
This week's expected range: 1274 – 1460
Today’s expected range: 1352 – 1394
Resistance: 1382, 1388, 1394
Support: 1352, 1358, 1367
Stocks to watch: GAMUDA, SUNWAY, UOADEV
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