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Thursday, May 3, 2012

FBM KLCI - higher on strong technical rebound


Stocks on Bursa Malaysia ended firmer yesterday, driven by continuous gains mostly seen in selected heavyweights, pushing the benchmark FBM KLCI to close at an intra-day high of 1,582.39. The FBM KLCI gained 11.78 points or 0.75% to close at 1,582.39 after opening at the day’s low of 1,572.47. Gainers thumped losers by 458 to 281 while 288 counters were unchanged. Turnover surged to 1.334 billion shares valued at RM1.434 billion from Monday’s closing of 945.419 million shares worth RM1.382 billion.

Taking cue from the strong performance on Wall Street overnight, the FBM KLCI opened with an up gap of 1.87 points at 1,572.47 and moved higher for the rest of the day with intermittent mild profit-taking to close at the highest point of the day. Chart-wise, the FBM KLCI formed a bullish white Marubozu candlestick which indicates the bulls were in control for the day. With the bullish up move yesterday, the FBM KLCI is likely to continue its momentum to move higher today with an immediate overhead resistance at 1,586 and 1,590 while the downside support zone is at 1,582 to 1,566.

MACD has turned flat while its histogram has turned shorter upward, indicating a pause in the bearish downward momentum. RSI (14) continued to move higher to 48.2 from 38 previously, indicating an improvement in the short term relative strength and returning of the index to the mildly bearish zone from the bearish zone. Stochastic also climbed higher to 18.5 from 7 previously, and has crossed above the slow stochastic line, reflecting the rebound. Readings from the indicators showed that the FBM KLCI is undergoing a technical rebound after being oversold, but the overall bearish picture is still intact.

Despite the strong rebound yesterday, the short term trend is still down and the FBM KLCI is still trapped within the downtrend channel. If only the key index can continue its upward move and close above the 1,590-point level, then the current downtrend is considered reversed, otherwise, the rebound could well be just a dead-cat-bounce which is short lived. The longer term trend remained up while the medium term trend is neutral.

Overnight, the Dow fell -10.75 points or -0.08% to close at 13,268.57. Today, the FBM KLCI is likely to trade within a range of 1,565 to 1,593.
 
This week's expected range: 1532 – 1618
Today’s expected range: 1565 – 1593

Resistance: 1586, 1589, 1593
Support: 1565, 1569, 1575

Stocks to watch: JCY, BIMB, KPSCB, ASUPREM, MUDAJYA

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