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Thursday, June 21, 2012

FBM KLCI - likely to re-test historical high


Stocks on Bursa Malaysia closed higher for the third consecutive day yesterday, surpassing the 1,600-point level, bolstered by gains in selected consumer and blue-chip stocks due to active local funds buying of index-linked blue chips. Tracking the positive movement of its regional peers, the FBM KLCI closed 9.41 points higher at 1,604.39 after opening 0.96 point higher at 1,595.94. Gainers thumped losers by 621 to 196 while 291 counters were unchanged. Turnover was higher at 1.401 billion shares worth RM1.763 billion from the 932.560 million units valued at RM1.459 billion posted on Tuesday.

Taking cue from the strong performance of the Dow overnight, the FBM KLCI opened 0.96 of a point higher at 1,595.94 and slipped to the intra-day low of 1,594.88 rights after the opening. The key index rebounded and continued to move higher with intermittent mild pullback to finish at the highest point of the day. Chart-wise, the FBM KLCI formed a bullish white candlestick which indicates buyers were in a state of bullish euphoria, and the key index might continue its upward momentum to move higher today. However, over-bullishness near the top often attracts heavy profit-taking. Immediate overhead resistance is at the historical high of 1,609.33, and a break above this level will send the FBM KLCI into an uncharted territory with a possible target of 1,632 and 1,661.

MACD continued to surge higher and so is the histogram, indicating a strong increase in the upward momentum. RSI (14) was higher at 66.1 from previous reading of 62.5, indicating a continued improvement of the short term relative strength and the FBM KLCI is getting more bullish. Stochastic was higher at 95.3, indicating a very strong market strength and continuation of the up cycle, nevertheless, it also indicated a short term overbought situation, and some pullback on profit taking is expected ahead. Readings from the indicators showed that the FBM KLCI is in a bullish state now, and the upward momentum is likely to carry the key index to a higher level with some shallow pullback expected ahead.

As mentioned in the previous analysis, the FBM KLCI will turn bullish after it crosses the 1,591-point level, and it did. The trend of the FBM KLCI is currently up and bullish as it is now staying above all the moving averages. With the total volume picking up again and reached 1.4 billion shares yesterday after staying below the 1.0 billion shares mark for about four weeks, it is likely to see more rotational play on the second and third liners.

Overnight, the Dow fell -12.94 points or -0.10% to close at 12,824.39. Today, the FBM KLCI is likely to trade within a range of 1,588 to 1,614
 
This week's expected range: 1561 – 1614
Today’s expected range: 1588 – 1614

Resistance: 1608, 1611, 1614
Support: 1588, 1591, 1598

Stocks to watch: TGOFFS, SCOMIMR, CRESBLD, KINSTEL, IJACOBS

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