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Friday, May 11, 2012

FBM KLCI - higher on technical rebound


Stocks on Bursa Malaysia rebounded yesterday on renewed buying interest in blue-chip counters despite the negative sentiment on most regional markets, and Wall Street overnight, lost further ground with key stock indices, slipping between 0.4% and 0.8%. Most eyes were now on Europe as the recent election results in Greece and Spain had added political ambiguity to its debt crisis and economic malady. The FBM KLCI was 3.16 points or 0.20% better at 1,588.06. It had opened slightly lower by 0.93 of a point at 1,583.97. Gainers led losers by 376 to 358 while 325 counters were unchanged. Turnover improved to 1.4 billion shares valued at RM1.399 billion from the 1.281 billion shares valued at RM1.414 billion on Wednesday.

The FBM KLCI opened 0.93 point lower at 1,583.97 and slipped to the intra-day low of 1,583.52 within the first five minutes of trading. The key index then rebounded and moved higher into the positive territory to hit the intra-day high of 1,590.20 before pulling back to close off high. Chart-wise, the FBM KLCI formed a bullish white piercing-line candlestick, a bottom reversal candle pattern, which indicates the bulls were fighting back after being beaten down a day earlier. The FBM KLCI might continue yesterday upward momentum to move higher today. However, strong resistance was seen at the 1,590-point level posted by the 30-day SMA, if the FBM KLCI is able to breakthrough this tough resistance level with conviction, the key index might move higher to re-test the 1,600-point psychological level.

MACD has turned upward marginally, and is just slightly below the signal-line and the zero-line, and a slight up move today will generate a golden-cross in the MACD which signals the consolidation is over and a buy call. RSI (14) hooked up to 51.8, indicating the short term relative strength of the FBM KLCI is back to the mildly bullish neutral zone. Stochastic reversed up to 62.8 from 56.7 a day earlier, indicating an improvement in the index’s strength as well as a continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI is still in a consolidation mode but with an upward bias.

The short term trend of the FBM KLCI has turned sideways range-bound as the index is now bound between the 10 and 30-day SMA, and a breakout above the 30-day SMA is likely to see the key index resuming its uptrend and move towards the 1,600-point level. The medium term trend is sideways while the long term uptrend still remained intact. With interest in blue-chips seen picking up, the FBM KLCI is likely to have a bullish bias.

Overnight, the Dow rebounded +19.98 points or +0.16% to close at 12,855.04. Today, the FBM KLCI is likely to trade within a range of 1,577 to 1,597.

This week's expected range: 1553 – 1614
Today’s expected range: 1577 – 1597

Resistance: 1591, 1594, 1597
Support: 1577, 1580, 1584

Stocks to watch: AIRASIA, MUDAJYA, MKH

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