Stocks on Bursa Malaysia closed mixed yesterday, helped by information technology-related counters and the ease in worries about China’s economic outlook as the latest data on China’s industrial activities were not as bad as expected. The benchmark FBM KLCI rose 0.71 point or 0.04% to close at 1,583.24. Losers led advancers by 397 to 363 while 360 counters were unchanged. Turnover decreased to 2.86 billion shares worth RM1.57 billion from 3.59 billion shares worth RM1.79 billion on Wednesday.
The FBM KLCI opened 1.59 points lower at 1,580.94 and slid to the intra-day low of 1,580.07 within the first five minutes of trading. The key index then rebounded and surged to the intra-day high of 1,586.65. It retreated on profit-taking and moved in a tight range for the rest of the day before a last minute selling pushed it to close just marginally higher. Chart-wise, the FBM KLCI formed a white inverted hammer candlestick which indicates the bulls were initially dominant but was later beaten by the bears. An inverted hammer candlestick appearing after a few days of up move normally signal a potential reversal and the key index might take a pause or reverse.
MACD inched up marginally and so is the histogram, indicating a gradual picking up in the momentum. Nevertheless, as the MACD is still below the signal-line, this may well be just a technical rebound. RSI (14) was marginally higher at 61.2, indicating a small improvement in the short term relative strength. Stochastic was higher at 57.2, indicating a continuation in the short term up cycle and improvement of the market strength. Readings from the indicators showed that the FBM KLCI is gradually gaining strength and momentum although marginal.
The overall trend of the FBM KLCI remained up. However, for the short term, the key index is still sideways range-bound but with an upward bias. Immediate overhead resistance zone is at 1,586 to 1,594 while the immediate downside support zone is at 1,580 to 1,573. With volume staying above the 2 billion shares mark, the broad market is likely to continue being dominated by active trading in the penny stocks while the index-link counters are likely to remain in consolidation mode.
Overnight, the Dow fell -78.48 points or -0.60% to close at 13,046.14. Today, the FBM KLCI is likely to trade within a range of 1,573 to 1,594.
This week's expected range: 1541 – 1605
Today’s expected range: 1573 – 1594
Resistance: 1587, 1590, 1594
Support: 1573, 1576, 1580
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