Stocks on Bursa Malaysia closed higher yesterday in tandem with the rally in regional markets prompted by positive US corporate earnings and encouraging Spanish debt sales. The benchmark FBM KLCI finished 2.67 points or 0.17% better at 1,598.86. Gainers outpaced losers by 394 to 350 while 337 counters were unchanged. Turnover increased to 2.134 billion shares, worth RM1.615 billion, from 2.079 billion shares, worth RM1.625 billion, recorded on Tuesday.
Taking cue from the strong performance of Wall Street overnight, the FBM KLCI opened with an up gap of 1.88 point higher at 1,598.07, and it surged to the intra-day high of 1,602.34 within the first thirty minutes of trading. Profit-taking activity then pushed the key index lower and it was bouncing between the intra-day high and low for the rest of the day. Chart-wise, the FBM KLCI formed a white inverted hammer candlestick which indicates attempts by the bulls to push the index higher but the bears were more dominant at the end of the day. The FBM KLCI is currently trapped in a triangle which indicates consolidation and the key index is likely to continue to move sideways range-bound today.
MACD and its histogram continued to slide lower, indicating a continued loss in the index’s momentum and represent a short term consolidation. RSI (14) hooked up slightly to 58 from 56.3 previously, hovering in the mildly bullish zone. Stochastic oscillator was lower at 57.1, indicating a continued loss the key index’s strength and a continuation of the short term down cycle. Readings from the indicators showed that the FBM KLCI is currently in a sideways consolidation mode, and this may continue until clear sign of breakout is observed.
The short term trend of the FBM KLCI has turned sideways as the key index is currently forming a triangle pattern, which represents short term consolidation. The medium and longer term trend, nevertheless, is still up. Immediate overhead resistance zone is at 1,602 to 1,605 while the immediate downside support zone is at 1,593 to 1,586. With the total volume continue to stay above the 2 billion shares mark, the market is likely to continue to be dominated by rotational play on the penny stock while the index linked counters consolidate themselves.
Overnight, the Dow fell -61.49 points or -0.47% to close at 13,054.05. Today, the FBM KLCI is likely to trade within a range of 1,592 to 1,607.
This week's expected range: 1574 – 1623
Today’s expected range: 1592 – 1607
Resistance: 1602, 1604, 1607
Support: 1592, 1595, 1597
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