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Wednesday, October 20, 2010

FBM KLCI - technical rebound

Stocks on Bursa Malaysia ended higher yesterday in a rotational play on heavyweights and lower liners while regional markets were largely mixed. The FBM KLCI rose 7.95 points or 0.54% to 1488.65, after opening higher by 3.04 points at 1483.74. Gainers led losers by 438 to 369 while 276 counters were unchanged. Volume jumped to 1.499 billion shares worth RM1.819 billion from Monday’s 1.33 billion shares worth RM1.61 billion.

The FBM KLCI rebounded to opened 3.04 points higher at 1483.74, and climb to the intra-day high of 1488.77 in early morning trade before profit-taking activities sent the key index down to its intra-day low of 1483.04. The late afternoon bargain hunting of selected heavyweights helped push the key index up to close near the day’s high at 1488.65. Chart-wise, the FBM KLCI formed a bullish Harami candlestick pattern, which indicates a counter-attack by the bull after falling for three consecutive days from the recent high of 1503.82. The key index has rebounded to close above its 10-day moving average (MA), however, is still below the 5-day MA which is currently at 1490.51, if the key index is able to break above this immediate resistance, then it might continue its up move to re-test the 1500 level.

MACD continued to slide lower, indicating an increased in the downward momentum. RSI (14) at 64.1 has hooked up, and is still in the bullish zone. Stochastic at 60.8 has continued its downward slide, indicating a continuation in the down cycle and the loss of market momentum. Mixed signals from the indicators are pointing toward a likely consolidation of the key index with a downward bias.

For the short term, The FBM KLCI is likely to be range-bound with a downward bias, while the medium to longer term uptrend still remained intact. Immediate overhead resistance zone is at 1490 to 1500, while the downside support zone is at 1480 to 1468.

Overnight, the Dow fell -165.07 points or -1.48% lower to close at 10,978.62. Today, the FBM KLCI is likely to trade within a range of 1479 to 1495.

This week's expected range: 1461 – 1524
Today’s expected range: 1479 – 1495

Resistance: 1491, 1493, 1495
Support: 1479, 1481, 1484

Stock to watch: MKLAND, EQUINE

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