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Friday, October 8, 2010

FBM KLCI - closing above 1480

Stocks on Bursa Malaysia ended mixed yesterday with the benchmark index closed marginally higher on last-minute buying in key heavyweights which pushed the benchmark index through the 1,480-point barrier. The FBM KLCI which slipped into the red after opening 1.98 points higher at 1481.59, recovered to close 1.84 points or 0.12% steadier at 1481.45. Market breadth was negative with losers leading gainers by 410 to 299 while 303 counters were unchanged. Turnover was lower with 841 million shares worth RM1.52 billion changed hands compared with Wednesday’s 954 million shares worth RM1.66 billion.

The FBM KLCI opened 1.98 points higher at 1481.59 and surged to touch the intra-day high of 1481.93 at the beginning of the day, and thereafter profit-taking activities set in to push the key index southward to hit the intra-day low of 1476.25. A last-minute buying of selected heavyweights help pushed the key to close above the resistance level of 1480 to close at 1481.59. Chart-wise, the price action of the key index formed a dragon-fly Doji candlestick which indicates the bear was initially in control but the bull fought back to take control of the key index. The key index is currently closing at the highest level of the year. It may continue its upward move to challenge higher level targets at 1491 and 1500, but will continue to face heavy profit-taking activities.

MACD continued to curve upward, albeit still below its trigger-line, and its histogram is getting shorter, indicates a gradual pick up in the upward momentum. RSI (14) at 70 is beginning to turn very bullish, nonetheless, has entered the short term overbought zone. Stochastic at 88.3 continued to move high, indicates the key index is gaining its upward strength. Signals from the indicators are indicating a continuation of the upward move and a gradual gain in momentum.

The underlying uptrend of the FBM KLCI remained intact, and as the key index is now closing above the 1480 level, it is poised to challenge the higher target levels of 1491 and 1500 in the near term. The market is expected to remain buoyant with the upcoming 2011 Budget to be unveiled next Friday.

Overnight, the Dow loss -19.07 points or -0.17% lower to close at 10,948.58. Today, the FBM KLCI is likely to trade within a range of 1472 to 1488.

This week's expected range: 1445 – 1491
Today’s expected range: 1472 – 1488

Resistance: 1483, 1485, 1488
Support: 1472, 1474, 1477

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