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Wednesday, October 27, 2010

FBM KLCI - marching towards 1,500-points level

Stocks on Bursa Malaysia ended higher yesterday with the benchmark FBM KLCI marched near the 1,500-point psychological level, boosted by gains in plantation counters and selected heavyweights. The FBM KLCI gained 5.50 points or 0.37% to close at 1496.94 after opening 2.46 points higher at 1493.90. Market breadth was positive with gainers led losers by 454 to 361 while 284 counters were unchanged. Turnover was higher at 1.375 billion shares worth RM1.874 billion from 1.131 billion shares worth RM1.470 billion on Monday.

The FBM KLCI opened with an up gap of 2.46 points at 1493.90 and moved to the morning session’s high of 1495.10 before profit-taking activities sent it to the intra-day low of 1491.81 at mid day. The key index, however, recovered gradually in the afternoon session, and a last minute buying of selected heavyweights helped push the key index to close at the day’s high at 1496.94. Chart-wise, the FBM KLCI formed a bullish white candlestick which indicates the bulls were taking control after a few days of suppression by the bear. Hence, the key index is expected to continue its march towards the 1500-point psychological resistance level.

MACD starts to turn flat indicating a slow down in the bearish momentum, and a first sign of upswing from its histogram which has already turned shorter upward. RSI (14) at 67.6 has moved higher into the bullish zone from the mildly bullish zone the day before, and is expected to continue its momentum to move higher. Stochastic at 64.8 has started to turn upward slightly, and is above its slow stochastic, is getting ready for an up move.
Signals from the indicators are indicating that the short term consolidation of the FBM KLCI is nearing an end, and is getting ready for an attack of the higher targets.

The FBM KLCI is gradually turning bullish for the short term as the 5-day moving average (MA) has just crossed above the 10-day MA, while the medium to longer term uptrend remained intact.

With the substantial positive leads on the domestic front, including the Economic Transformation Programme projects and the pre-election hypes, these factors will help to push the market higher till end of this year.

Overnight, the Dow rose +5.41 points or +0.05% higher to close at 11,169.46. Today, the FBM KLCI is likely to trade within a range of 1488 to 1503.

This week's expected range: 1459 – 1516
Today’s expected range: 1488 – 1503

Resistance: 1499, 1501, 1503
Support: 1488, 1490, 1493

Stocks to watch: DXN, TSM

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