FBM KLCI - higher on last minute rebound

FBM KLCI - higher on last minute rebound

Stocks on Bursa Malaysia ended mixed yesterday with the benchmark FBM KLCI reversing its earlier losses on mild buying interest in selected finance and plantation counters. Late buying of heavyweight Sime Darby pushed the FBM KLCI into the positive zone at the close while nearly all the key Asian markets were in the red, dampened by China’s central bank’s move to reduce its reserve requirement, the second industry-wide cut in two months. At close, the FBM KLCI settled at 1,848.66, up 2.80 points or 0.15%, after fluctuating between 1,841.10 and 1,848.97. Losers overwhelmed gainers by 485 to 346, with 313 counters unchanged. Total volume stood at 3.13 billion shares worth RM2.14 billion, up from Friday’s 2.58 billion shares worth RM2.28 billion.

Taking cue from the heavy fall on Wall Street last Friday, the FBM KLCI opened 1.61 points lower at 1,844.25 and plunged lower to hit the intra-day low of 1,841.10 fifteen minutes after opening. The key index rebounded strongly from the low to touch the intra-day high of 1,848.97 in the next fifteen minutes. However, the rise found no follow through and the key index slipped lower into the red for a major part of the day on profit taking, but a last minute buying on selected heavyweights lifted the key index to close in the positive zone. Chart-wise, the FBM KLCI formed a bullish white piercing-line candlestick pattern, a two-day bottom reversal pattern which indicates the bulls were fighting back after being beaten down earlier. Hence, the FBM KLCI is likely to continue its rebound to move higher today to challenge its immediate overhead resistance zone of 1,850 to 1,856. Immediate downside support zone is at 1,841 to 1,836.

MACD which is below the signal-line, was marginally lower and so is the histogram, indicating a state of consolidation. RSI (14) hooked upward to 63.2 from 61.8, indicating a mild rebound and the short term relative strength of the FBM KLCI is still in the bullish zone. Stochastic was higher at 74.8 from 69.7, and made a golden-cross over the slow stochastic line, issuing a buy signal and indicated that the short term down cycle has reversed up. Readings from the indicators showed that the FBM KLCI is in a state of consolidation with sign of reversal indicated by the stochastic oscillator, and the key index may stage further rebound.

The general trend of the FBM KLCI is up as the key index continued to stay above the short, medium and long term moving averages. Nonetheless, the near term trend of the FBM KLCI is sideways range-bound within a range of 1,836 to 1,856. With the rebound yesterday, the FBM KLCI is likely to stage further upward move to test the immediate overhead resistance zone of 1,850 to 1,856, and a successful breakthrough will see the key index moving higher to challenge the next overhead resistance zone of 1,858 to 1,880. On the broader market, rotational play on small caps and ACE market remained active as can be seen from the increasing volume to above three billion shares.

Overnight, the Dow rebounded 208.63 points or 1.17% to close at 18,034.93. Today, the FBMKLCI is likely to trade within a range of 1,835 to 1,856.

This week's expected range: 1820 – 1869
Today’s expected range: 1835 – 1856

Resistance: 1851, 1854, 1856
Support: 1835, 1838, 1843

Stocks to watch: ARMADA, ASIAPAC, AT, BJAUTO, BOILERM, BPPLAS, BRIGHT, BTM, COMCORP, CONNECT, FLBHD, FSBM, GBGAQRS, GRANFLO, GPACKET, HEXZA, IDEAL, INSAS, INSTACO, IRCB, KIALIM, KKB, LBS, NICE, NOVAMSC, PANPAGE, PRESBHD, PICORP, RCECAP, RGB, SENDAI, SUNSURIA, TNLOGIS

Stock pick highlight: SUNSURIA (3743)

Last Price: RM1.65 +0.06
Support Level: RM1.58, RM1.53
Resistance Level: RM1.69, RM1.70, RM1.75, RM1.78, RM1.86, RM1.94, RM2.01, RM2.10, RM2.20
Entry Level: RM0.96 – RM0.97

Technical Analysis

SUNSURIA (3743) rebounded from its intra-day low of 1.58 to close higher at 1.65 after hitting the intra-day high of 1.69. Technically, the chart of SUNSURIA formed a bullish white candlestick with increasing volume, indicating strong buying interest came into the stock yesterday. It breaks out from the consolidation range forming a Rectangle pattern breakout. MACD surged upward and is above the signal-line, and its histogram also extended upward strongly, indicating an increased in momentum to the upside and a buy signal. RSI (14) rose to 71.6 from 63.2, indicating the stock is turning very bullish. Stochastic hooked upward to 73.2 from 70.6, is still below the slow stochastic line, indicated that the stock is rebounding and turning stronger after recent consolidation. The medium and long term trend of SUNSURIA is up, and the short term trend is up with the 5-day SMA closing above the 10-day SMA and both are above the 30-day SMA, and a confirmed breakout above RM1.69 will see an upside target of RM1.70, follow by RM1.75, RM1.78, RM1.86, RM1.94, RM2.01, RM2.10 and RM2.20.

Since the short term trend is bullish, day traders with shorter time frame perspective may ride on the short term bullishness and buy on breakout level (RM1.69). Those with lower risk appetite should wait at the side-line and buy on the dip.

Price Objective
Short Term – target price at (RM1.70, RM1.75, RM1.78, RM1.86), stop loss (RM1.57)
Mid Term – target price at (RM1.94, RM2.01, RM2.10, RM2.20), stop loss (RM1.52)

Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. The Stocks to watch is not a recommendation to buy or sell the particular stock, as it is only meant for graduates of the "Share Trading the Pro Way" course as case study. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

 http://millionairetrendtrader.blogspot.com