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Wednesday, May 9, 2012

FBM KLCI - rebounded in tandem with regional recovery


Stocks on Bursa Malaysia finished better yesterday on a technical rebound in tandem with the recovery in regional riskier assets from Monday’s losses. The FBM KLCI was 5.73 points higher at 1,590.60. It had opened slightly lower by 0.4 point at 1,584.47. Gainers led gainers by 404 to 307 while 357 counters were unchanged. Turnover rose to 1.274 billion shares valued at RM1.235 billion from Monday’s 963.02 million shares valued at RM1.194 billion.

The FBM KLCI opened 0.40 of a point lower at 1,584.47 and slipped lower to the intra-day low of 1,583.72 rights after opening, but recovered quickly to move higher for the rest of the day. Some last minute buying of selected blue-chips pushed the key index to close at the highest point of the day. Chart-wise, the FBM KLCI formed a bullish white candlestick which indicates buyers were dominant, and this also confirmed the possible reversal signal generated by the Doji candlestick a day earlier. With the bullish up move yesterday, the FBM KLCI is likely to continue climbing higher today and the immediate overhead resistance zone is at 1,594 to 1,600.

MACD continued to climb higher and the histogram also turned shorter upward, indicating continued easing of the bearish momentum, as the MACD line is still below the zero-line as well as below the signal line. Nonetheless, the gap is closing up, and a golden cross above the signal line is expected soon. RSI (14) hooked upward to 53.8, indicating the short term relative strength is back to the mildly bullish state. Stochastic was higher at 62.2, indicating a continued improvement of the index’s strength and continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI is slowly shrugging off its short term bearishness to try to regain its upward momentum.

The short term trend of the FBM KLCI has turned up as the index is now closing above the short term 5, 10 and 20-day SMA and is sitting right on the 30-day SMA. A continue up move above the 30-day SMA would mean the key index is turning bullish for the short term. However, the lower support trend line of the longer term uptrend channel which is currently at 1,600-point will serve as strong overhead resistance. If only the FBM KLCI can climb back into the uptrend channel, then the threat of a downtrend is reduced.

Overnight, the Dow fell -76.44 points or -0.59% to close at 12,932.09. Today, the FBM KLCI is likely to trade within a range of 1,579 to 1,598.

This week's expected range: 1553 – 1614
Today’s expected range: 1579 – 1598

Resistance: 1593, 1596, 1598
Support: 1579, 1581, 1586

Stocks to watch: MBL, MAYBULK, MPHB, PRESBHD, KPSCB

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