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Tuesday, October 12, 2010

FBM KLCI - remain bullish

Stocks on Bursa Malaysia ended broadly higher yesterday in line with the firmer regional markets on strong buying in selected heavyweights in the plantation and banking sectors. Speculation on the US Federal Reserve would inject fresh money into the US economy spurred buying interests in the regional markets. The benchmark FBM KLCI rose 6.0 points, or 0.41%, to close at 1487.41 after opening 4.73 points higher at 1486.14. Gainers outnumbered losers by 479 to 287 while 293 counters were unchanged. Volume rose to 1.09 billion shares valued at RM1.72 billion from 1.08 billion shares valued at RM1.66 billion last Friday.

The FBM KLCI opened with 4.73 points up gap at 1486.14 and surged to the intra-day high of 1490.10 within the first twenty minutes of the day. Profit-taking activities set in and sent the key index to the intra-day low of 1484.57. A last minute buying of selected heavyweights helped lift the key index to close off low at 1487.41. Chart-wise, the key index formed a spinning-top candlestick which indicates indecision of the market to move higher, however, the bull still have an upper hand.

Daily MACD continued to move higher, albeit still below its signal-line, indicates a gradual pick up in upward momentum, as shown by the increasing shorter histogram. RSI (14) at 72.3 has move into the short term overbought zone, indicates the key index is turning more bullish. Stochastic at 93.8 continued to move higher into the overbought zone, and is tapering off. Signals from the indicators are indicating a gradual pick up in the upward momentum, and may continue its rise towards the 1500 point level.

The underlying uptrend of the FBM KLCI as indicated by the short, medium and long term moving averages remained firmly intact. Immediate overhead resistance zone is at 1491 to 1500; with the 1500 point level being the key psychological resistance level to be watch out. Immediate short term support zone lies at 1471 to 1480 provided by the 5 and 10-day short term moving average.

The FBM KLCI is expected to remain buoyant before the announcement of the Budget 2011 this coming Friday, and the market will continue to be active with rotational play. Overnight, the Dow rose +3.86 points or +0.04% higher to close at 11,010.34. Today, the FBM KLCI is likely to trade within a range of 1479 to 1496.

This week's expected range: 1445 – 1520
Today’s expected range: 1479 – 1496

Resistance: 1490, 1493, 1496
Support: 1479, 1481, 1484

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