FBMKLCI - higher on follow through buying
Stocks
on Bursa Malaysia finished on a firm note yesterday on window-dressing,
which was in line with regional bourses performance. At close, the
benchmark FBMKLCI rose by 28.06 points or 1.64% to end at 1,744.05,
after opening 7.88 points higher at 1,723.87. Gainers trounced losers by
695 to 203, while 221 counters were unchanged. Total volume fell to
1.58 billion shares worth RM1.64 billion from 1.87 billion shares worth
RM2.21 billion on last Friday.Continuing the strong rebound from last Friday, the FBMKLCI opened with an upside gap of 7.88 points at 1,723.87. The key index pulled back to hit the intra-day low of 1,722.67 briefly after opening and rebounded to move higher for the rest of the day. It touched the intra-day high of 1,746.39 just before closing, and mild profit-taking dragged the key index to close off high. Chart-wise, the FBMKLCI formed a bullish white candlestick with an upside runaway gap which indicates bullish sentiment and continuation of the buying momentum from last Friday. The FBMKLCI has also covered the downside gap formed on December 15, and hence, the key index is likely to move higher on continued buying momentum. Immediate overhead resistance zone is at 1,750 to 1,765, while the downside support zone is at 1,730 to 1,722.
MACD continued to rise and is approaching the signal-line, indicating a continuation of the upswing and increased of the upward momentum. RSI (14) was higher at 46.6 from 38.7, indicating an improvement in the short term relative strength from bearish to a mildly bearish state. Stochastic continued to rise to 37.6 from 19.5, and has crossed over the 20-level, indicating a continuation of the short term up cycle and further strengthening of the key index. Readings from the momentum indicators showed that the FBMKLCI is gaining strength and momentum, and hence, is likely to move higher on follow through buying.
The short term trend of the FBMKLCI has reversed up as the key index has closed above the short term 5, 10, and 15-day simple moving averages (SMA). At the same time, the FBMKLCI has also closed above the very long term 720-day SMA which served to give support at the 1,730-point level. Nevertheless, based on the bigger picture, the upswing over the last four sessions is still considered a technical rebound in an extreme oversold market as the general trend is still down. In order to fully reverse the downtrend, the FBMKLCI will have to move above the cluster of medium and long term moving averages resistance zone, with the highest resistance level posted by the 180 and 200-day SMA at 1,845 and 1,844 point respectively. Based on Fibonacci retracement study, the FBMKLCI has recovered more than 23.6% for the range measuring from the historical high of 1,896.23 to the recent pivot low of 1,671.82, and the next overhead resistance level is at the 38.2% Fibonacci retracement level at 1,757.5; and for the downtrend range from the pivot high of 1,845.76 to the pivot low of 1,671.82, the FBMKLCI has recovered 38.2%, and the next strong overhead resistance level is at the 50% Fibonacci retracement level which is at 1,758.8. Hence, 1,758-point will be the critical resistance level for the current uptrend, and a successful break will see the key index moving higher. Nonetheless, after recovering more than 70-points in four consecutive sessions, and do expect the market to pullback on profit-taking when it approach the 1,750 to 1,758 levels.
Overnight, the Dow rose 154.64 or 0.87% to close at 17,959.44. Today, the FBMKLCI is likely to trade within a range of 1,705 to 1,770.
This week's expected range: 1653 – 1751
Today’s expected range: 1705 – 1770
Resistance: 1752, 1761, 1770
Support: 1705, 1713, 1729
Stocks to watch: AEON, AIRASIA, BONIA,
CENSOF, COASTAL, DSONIC, DELEUM, ECONBHD, GDEX, IOIPROP,KNM, MUIIND,
MITRA, PMCORP, PERDANA, PMETAL, SCICOM, SKPETRO, SUNZEN, VS, YINSON
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