FBM KLCI - higher amid mixed market

Stocks on Bursa Malaysia closed on a mixed note yesterday in cautious trading in line with regional markets, weighed by a higher yen and weak China’s manufacturing data. News that Federal Reserve chairman Ben Bernanke had no plans to further ease monetary policy to stimulate the US economy also dampened sentiment. The FBM KLCI rose by 3.80 points or 0.24% to close at 1,573.45, helped by gains in heavyweights. Losers led gainers by 506 to 309 while 302 counters were unchanged. Turnover fell to 1.62 billion shares worth RM2.02 billion from Wednesday’s 1.94 billion shares worth RM2.69 billion.

The FBM KLCI opened 0.76 of a point lower at 1,568.89 and rebounded to climb higher after briefly touching the intra-day low of 1,568.83. It hit the intra-day high of 1,576.23 near noon before pulling back on profit-taking in the afternoon to close off high. On the daily chart, the FBM KLCI formed a bullish white candlestick which indicates the bulls are still in control and continuation of the uptrend after the strong breakout a day earlier. The FBM KLCI is likely to move higher today, and immediate overhead resistance is at 1,577-point level. If the key index is able to break through this resistance level then it will move towards its next target which is the all time high level of 1,597.08.

MACD continued its rebound to climb high and so is the histogram, indicating continued improvement in the key index’s momentum. Nevertheless, MACD is still below the signal-line. RSI (14) was higher at 67.9, indicating the short term relative strength of the key index is getting more bullish. Stochastic hooked up to 75.5 and has crossed above the slow stochastic line, indicating the short term corrective cycle is over and a new up cycle is in the making. Readings from the indicators showed that the FBM KLCI’s momentum is picking up and is likely to send it to a higher level.

The short term trend of the FBM KLCI has again turned up as the 5-day SMA has crossed above the 10-day SMA, and overall, the key index is still on a steady uptrend. Immediate overhead resistance zone is at 1,577 to 1,582 while the downside support zone is at 1,567 to 1,553. The index-linked heavyweights are likely to continue their uptrend with potential profit-taking ahead of the weekend, and the second and third liners are likely to continue their correction and consolidation.

Overnight, the Dow rebounded +28.23 points or +0.22% to close at 12,980.30. Today, the FBM KLCI is likely to trade within a range of 1,562 to 1,584.

This week's expected range: 1541 – 1577
Today’s expected range: 1562 – 1584

Resistance: 1577, 1581, 1584
Support: 1562, 1565, 1569