Stocks on Bursa Malaysia closed marginally higher yesterday supported by foreign institutional buying amid improved global economic sentiment. Strong buying interest was noted by foreign investors driven by the fact that mega projects were scheduled to kick off this year under the government’s Economic Transformation Programme. The benchmark FBM KLCI finished 3.53 points or 0.22% higher at 1,578.36 after fluctuating between 1,576.17 and 1,580.41 throughout the day. Decliners led advancers by 415 to 336 while 339 counters closed unchanged. Total volume climbed to 1.769 billion shares, valued at RM1.763 billion, from 1.742 billion shares, valued at RM2.03 billion, registered on Wednesday.
Taking cue from the rebound on Wall Street overnight, the FBM KLCI opened 1.53 points higher at 1,576.36 and surged to the intra-day high of 1,580.41 within the first thirty minutes, and profit-taking activity which emerged pressed the key index lower and fluctuated in a narrow range for the rest of the day. Chart-wise, the FBM KLCI formed a small white inverted hammer candlestick in Harami position which indicates a rebound on cautious buying. A bullish Harami formation is a key reversal candle pattern which indicates a possible change in the dominant market force direction, and hence, the key index is likely to see a follow through rebound today with immediate overhead resistance level at 1,580 while the immediate downside support level is at 1,572.
MACD continued to slide lower and is staying just above the signal-line, indicating a further loss in the momentum and consolidation, and a cross-over below the signal-line would flash a short term sell signal. RSI (14) hooked upward to 62.7, reflecting the weak rebound. Nonetheless, the short term relative strength is still in the bullish zone. Stochastic continued to slide lower to 68.3, indicating the short term down cycle is in continuation. Readings from the indicators showed that the FBM KLCI is in consolidation mode, however, the undertone still remained bullish.
The main trend of the FBM KLCI remained up, and yesterday’s rebound had managed to keep the key index above the middle uptrend line of the trend channel. However, the key index is currently trapped between the 5 and 10-day SMA, and may continue to consolidate until a break above or below these two immediate short term moving averages. Total volume was just marginally higher, and as the weekend is approaching, profit-taking activity may prolong the consolidation process.
Overnight, the Dow rose +70.61 points or +0.55% to close at 12,907.94. Today, the FBM KLCI is likely to trade within a range of 1,571 to 1,585.
This week's expected range: 1527 – 1622
Today’s expected range: 1571 – 1585
Resistance: 1581, 1583, 1585
Support: 1571, 1574, 1576
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