Millionaire Trend Trader: Good start for the New Year.

Monday, January 11, 2010

Good start for the New Year.

Stocks on Bursa Malaysia kicked off the New Year with a rally on the first week of the year and sent the benchmark index to close higher. The FBM KLCI opened the New Year near the low of 1272.31 and rallied to an intra-week high of 1299.70 before profit taking activities bring it down to close the week at 1292.98, posting a week-on-week gain of 20.20 points or 1.59%. Weekly volume surged to a high of 7.1614 billion shares compared with 2.2237 billion shares the week before, indicating the returned of buying interest.

On the weekly chart, the FBM KLCI formed a bullish white candlestick and made a breakthrough above the resistance level of 1288.42 after seven weeks of consolidation. With the increase in volume, it may propel the index to move higher this week.

Weekly MACD turned flat, whereas its histogram has started to turn up indicating a gradual picking up of market momentum. Weekly RSI at 73.6 has hooked up and is gaining strength, and weekly Stochastic too has hooked up to cross above the 80 mark, back to the bullish zone.

On the daily chart, the FBM KLCI formed a small body black candlestick on last Friday, indicating profit taking and consolidation after a strong rally since last Monday. It is supported below at 1288 and capped above by the resistance at 1300.

Daily technical indicators are all positive. MACD continued to move higher but its histogram dropped slightly reflecting the pulled back of the index after hitting the intra-week high of 1299.70. RSI at 68 remained strong, whereas Stochastic has crossed below its slow Stochastic, reflecting the consolidation. The underlying uptrend as indicated by the moving averages is intact.

With the upbeat mood in market sentiment, and the Dow Jones Industrial Average charting a new high of 10618.19 on last Friday’s close, the benchmark KLCI is expected to move higher to re-challenge the 1300 mark this week.

This week, the FBM KLCI is likely to trade within a range of 1260 to 1330. As for today, it is likely to trade within a range of 1286 to 1300.

This week's expected range: 1260 – 1330
Today’s expected range: 1286 – 1300

Resistance: 1295, 1298, 1300
Support: 1286, 1288, 1291

Stock to watch: L&G, LBS

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Monday, January 11, 2010

Good start for the New Year.

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