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Thursday, October 14, 2010

FBM KLCI - marching towards 1500

Stocks on Bursa Malaysia closed higher yesterday, led by gains in plantation-related stocks amid higher crude palm oil (CPO) prices. The positive close on Wall Street overnight, coupled with steadier key regional markets spurred buying interest in the local market. The benchmark FBM KLCI rose 10.40 points or 0.70% to close at 1496.97 after opening 2.99 points higher at 1489.56. Gainers beat losers by 577 to 235 while 256 counters were unchanged. Volume rose to 1.199 billion shares valued at RM2.026 billion from 1.169 billion shares worth RM1.90 billion on Tuesday.

The FBM KLCI opened 2.99 points higher at 1489.56 and continued to move higher throughout the day with intermittent profit-taking activities along the way. A last minute buying in selected heavyweights pushed the key index to close at the high of the day at 1496.97. Chart-wise, the key index formed a bullish Marubozu candlestick which indicates buyers were in control throughout the day. The FBM KLCI is now charting another new high for the year and marching steadily towards the 1500 mark. The market sentiment is very bullish and the key index is expected to challenge the historical high of 1524.69 charted on January 14, 2008 soon if it is able to breakthrough the 1500 point psychological resistance level.

MACD has turned upward after falling for one day, is approaching its signal-line, albeit still below it, which indicates a pick up in the upward momentum. RSI (14) at 75.3 has hooked upward strongly and moved higher up into the short term overbought zone, indicating a very bullish state of the key index. Stochastic at 93.5 too has turned upward, indicating a continuation of the bullish up cycle. Signals from the indicators are indicating a very bullish state of the FBM KLCI, hence, it is likely to continue its current uptrend to move higher.

The underlying uptrend of the FBM KLCI remained very bullish as indicated by the short, medium and long term moving averages (MA) that are well separated. Immediate overhead key resistance levels are found at 1500, 1516 and 1524, while the immediate downside support zone is at 1486 to 1477 provided by the short term 5 and 10-day MAs.

With the Budget 2011 to be tabled tomorrow, the overall market is expected to remain buoyant with rotational play continue to be the main theme. Overnight, the Dow rose +75.68 points or +0.69% higher to close at 11,096.08. Today, the FBM KLCI is likely to trade within a range of 1484 to 1505.

This week's expected range: 1445 – 1520
Today’s expected range: 1484 – 1505

Resistance: 1499, 1502, 1505
Support: 1484, 1487, 1491

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