Stocks on Bursa Malaysia ended on a firmer note yesterday after mixed trading throughout the day, up in line with an optimistic global equity market hoping for steps to contain the debt crisis at the European Union summit tomorrow. The market made a cautious rebound and was up in tandem with steadier regional bourses, after profit-taking activities yesterday. However, investors were also cautious of the China inflation data due this week. The FBM KLCI staged a rebound to end 2.07 points or 0.14% higher at 1,482.99 after opening 0.33 point lower at 1,480.59. Market breadth was positive with gainers led losers by 445 to 304 while 306 counters were unchanged. A total of 2.088 billion shares valued at RM1.770 billion were traded compared with 2.261 billion shares worth RM1.304 billion on Tuesday.
The FBM KLCI opened 0.33 point lower at 1,480.59 and slid lower to hit the intra-day low of 1,473.68 at noon. The key index continued to stay in the negative territory in the afternoon, and some late buying in selected blue-chips lifted the key index to close at the positive territory. Chart-wise, the FBM KLCI formed a hammer candlestick, a bottom reversal candle pattern which indicates that sellers were initially dominant in pushing down the index but later buyers came in to lift up the index. With the key index correcting to the low of 1,473.68 and rebounded from there, the correction to cover the gap is considered over, and the FBM KLCI is likely to stage a follow through rebound today. Immediate overhead resistance zone is at 1,485 to 1,493.
MACD was higher, but the histogram continued to shrink, indicating the upward momentum was weak. RSI (14) hooked up marginally to 57.5, indicating the relative strength is still mildly bullish. Stochastic, however, has continued to slide lower to 77.1, indicating a continued loss in market strength or momentum. Mixed readings from the indicators showed that the FBM KLCI is likely to continue its consolidation with an upward bias.
The FBM KLCI is in a short term correction mode as the index is currently below the 5-day simple moving average (SMA) but is still above the 10, 20 and 30-day SMA. The medium and longer term trend remained sideways. The key index is currently closing just above the 360-day SMA but is below the 120-day SMA at 1,487. If the key index is able to move above the 1,487-point level, then it might move higher to re-test the immediate resistance of 1,493-point. With the volume traded continue to remain high but with low share value, the overall market is likely to continue with its rotational play on the second and third liner stocks.
Overnight, the Dow rose +46.24 points or +0.38% to close at 12,196.37. Today, the FBM KLCI is likely to trade within a range of 1,467 to 1,493.
This week's expected range: 1410 – 1568
Today’s expected range: 1467 – 1493
Resistance: 1487, 1490, 1493
Support: 1467, 1470, 1476
Stocks to watch: RSAWIT, LONBISC
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