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Friday, March 30, 2012

FBM KLCI - higher on technical rebound


Stocks on Bursa Malaysia closed lower yesterday, in tandem with losses on global markets due to concerns over the prospects of economic slowdown in US and China. Gains in selected blue-chips, however, helped the benchmark FBM KLCI to gain 1.69 points or 0.11% to close at 1,585.44. Decliners beat advancers by 462 to 260 while 353 counters were unchanged. Turnover fell to 1.496 billion shares worth RM1.398 billion from 1.562 billion shares worth RM1.305 billion on Wednesday.

The FBM KLCI opened 0.42 point higher at 1,584.17 but slipped to the intra-day low of 1,581.79 within the first twenty minutes of trading. The key index rebounded to climb higher gradually to close near the intra-day high level. Chart-wise, the FBM KLCI formed a small white hammer-like candlestick, a bottom reversal candlestick pattern, which indicates the bears were initially dominant but later the bulls fight back to push the key index higher. As the candlestick also formed a piercing-line candle pattern, the FBM KLCI is likely to stage a follow through rebound today. Immediate overhead resistance is envisaged at 1,589 and 1,591.

MACD was marginally lower and so is the histogram, indicating a continued loss in the key index’s momentum. Nevertheless, as the MACD is still above the zero-line, current weakness may well be just part of a consolidation process in an uptrend. RSI (14) hooked up slightly to 60 from 58.9 previously, reflecting the mild rebound and a return of the short term relative strength to the bullish zone. Stochastic was flat at 81.2, and is still above the slow stochastic line, indicating a pause in the downward momentum. Readings from the indicators showed that the FBM KLCI is currently in a consolidation mode.

The overall uptrend of the FBM KLCI remained intact, and the key index has also closed above the short term 5-day SMA. Immediate overhead resistance zone is at 1,589 to 1,594 while the downside support zone is at 1,581 to 1,570, with 1,573 being a critical support provided by the 30-day SMA. With the total volume continue to shrink, the consolidation process is likely to extend. Overnight, the Dow gained +19.61 points or +0.15% to close at 13,145.82. Today, the FBM KLCI is likely to trade within a range of 1,579 to 1,590.

This week's expected range: 1559 – 1604
Today’s expected range: 1579 – 1590

Resistance: 1587, 1588, 1590
Support: 1579, 1580, 1583

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