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Thursday, October 7, 2010

FBM KLCI - poise to challenge new high

Stocks on Bursa Malaysia ended higher yesterday with the benchmark index staying firmly above the 1470 level on continuous follow-through buying in heavyweights like Genting, Tenaga and Axiata. The market took cue from the hefty rise on Wall Street overnight and tracks the gains in regional bourses. The FBM KLCI rose 7.42 points or 0.50% to 1479.61, a new high for the year, after opening 6.13 points higher at 1478.32, it touched an intra-day higher of 1483.25. Gainers thumped losers by 443 to 330 while 283 counters were unchanged. Turnover was slightly lower at 954 million shares worth RM1.66 billion compared with Tuesday’s 985 million shares worth RM1.51 billion.

The FBM KLCI opened with a big up gap of 6.13 points and surged to the intra-day high of 1483.25 within the first five minutes, profit-taking activities immediately surfaced which capped further gains and pressed the key index downward. The key index was trading southward throughout the day with intermittent rebound to hit the intra-day low of 1476.05 under heavy profit-taking activities. However, last minutes buying of selected heavyweights help pushed the key index to close off low at 1479.61, registering a gain of 0.02 point above the recent high of 1479.56.

Chart-wise, the key formed a spinning-top candlestick, which indicates hesitation of the market to move up further. In fact, the price action of the key index actually indicates heavy-profit taking activities at current level which curb gains. The key index may continue its attempt to challenge the overhead resistance zone of 1480 to 1500, with immediate resistance level at 1483 and 1491.

MACD had started to curve up, indicating a change in the momentum from down to up. RSI (14) at 69.4 continued to climb upward and is moving towards the very bullish zone. Stochastic at 73.5 has move out of its consolidation range, and indicates the possible beginning of another up cycle of the FBM KLCI. Readings from the indicators are indicating that the FBM KLCI is again turning bullish and the possible beginning of another round of up cycle.

The FBM KLCI is now closing at the year high and is above its recent high of 1479.56, and is expected to continue its up move. The underlying uptrend remained intact and the market is in a bullish condition getting ready to challenge the 1500 psychological resistance level.

Overnight, the Dow rose +22.93 points or +0.21% higher to close at 10,967.65. Today, the FBM KLCI is likely to trade within a range of 1468 to 1491.

This week's expected range: 1445 – 1491
Today’s expected range: 1468 – 1491

Resistance: 1483, 1487, 1491
Support: 1468, 1472, 1476

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