FBMKLCI - higher on technical rebound
Stocks
on Bursa Malaysia closed higher for the first time this year, in tandem
with the upbeat overnight performance on Wall Street, with the
benchmark FBMKLCI rose 18.88 points, or 1.1%, to 1,728.06 yesterday
after weeks of being spooked by global crude oil price bearishness, as
Malaysia’s November 2014 export data released on Wednesday saw the
country’s trade surplus at its highest in three years. On the broader
market, gainers outpaced losers by 555 to 240 with 269 counters
unchanged. Total volume contracted to 1.6 billion shares worth RM1.8
billion from 1.61 billion units worth RM2.1 billion on Wednesday.Following the upbeat performance on Wall Street overnight, the FBMKLCI opened 5.22 points higher at 1,714.40. It pulled back to hit the intra-day low of 1,714.02 briefly after opening and rebounded to climb higher for the rest of the day. The key index touched an intra-day high of 1,730.18 just before closing but last minute profit-taking activities dragged it to close off high. Chart-wise, the FBMKLCI formed a bullish long white candlestick which together with the earlier two candlesticks formed a morning-star bottom reversal pattern. The bullish move yesterday also confirmed yesterday’s interpretation that the FBMKLCI might stage a technical rebound. Hence, the FBMKLCI is likely to move higher today on follow through buying momentum. Immediate overhead resistance zone is at 1,730 to 1,736, the downside gap area formed on January 6, 2015, and a close of this gap will likely see the FBMKLCI moving higher to the 1,740 to 1,750 zone.
MACD hooked upward gently, while its histogram was marginally lower, indicating a reduction in the bearish momentum. RSI (14) hooked upward to 43.6 from 36.8, indicating a swing that move the key index back to a mildly bearish state from a bearish state. Stochastic was lower at 43.6 from 49.6, indicating a continuation of the down cycle and the upward move was not strong enough to reverse the down cycle yet. Readings from the indicators showed that the FBMKLCI was staging a technical rebound yesterday, and is likely to move higher on follow through rebound.
The general trend of the FBMKLCI still remained down and bearish as the key index continued to stay below the short, medium and long term simple moving averages (SMA). However, the bullish up move yesterday has seen the key index reversing to test the near term overhead resistance zone posted by the 5-day SMA, and a break will see the key index moving higher to challenge the overhead resistance zone of 1,732 to 1,748 posted by the 10, 15, 20 and 30-day SMA. Nonetheless, in order to reverse the short term down trend, the FBMKLCI must at least move above the pivot high of 1,770.52 registered on December 30, 2014. Otherwise, the current upward move may turn out to be just a technical rebound or a bull-trap.
Overnight, the Dow rose 323.35 or 1.84% to close at 17,907.87. Today, the FBMKLCI is likely to trade within a range of 1,701 to 1,746.
This week's expected range: 1710 – 1799
Today’s expected range: 1701 – 1746
Resistance: 1734, 1740, 1746
Support: 1701, 1707, 1717
Stocks to watch: ASIABIO, CAREPLS, CBIP,
CENSOF, DSONIC, ESCERAM, FLBHD, GTRONIC, IFCAMSC, INARI, INSAS, IQGROUP,
KTB, MEGB, MMSV, PENTA, SCICOM, SYSTECH, TEXCHEM, YGL
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