Millionaire Trend Trader: FBM KLCI

Thursday, March 18, 2010

FBM KLCI - technical rebound

Stocks on Bursa Malaysia rebounded to close higher yesterday after four consecutive days of declines. The FBM KLCI rose in tandem with major Asian bourses as investors cheered the US Federal Reserve's pledge to keep rates near zero for a prolonged period. The benchmark FBM KLCI rose 3.09 points or 0.24% to close at 1301.95 after opening 4.18 points better at 1,303.04. Gainers led losers by 405 to 268 while 289 counters were unchanged. Volume increased slightly to 741 million shares worth RM1.218 billion.

The FBM KLCI opened 4.18 points higher at 1303.04 and surged to the intra-day high of 1307.08 before profit-taking activities pressed the index to the intra-day low of 1300.29, and last minute buying lifted it off-low to close at 1301.95 forming a black Spinning Top candlestick. The price action of the index reflected a technical rebound which was met with heavy profit-taking activities.

MACD continued to move lower indicating the gradual loss in upward momentum. RSI(14) at 56.6 has hooked up reflecting the technical rebound, and is still in the neutral zone. Stochastic at 49.3 continued to move lower and is below the 50 level indicating the index is turning weak. The signals from the indicators reflected the consolidation mode of the index.

The short term trend of the FBM KLCI is down as the index continued to stay below its 5 and 10-days moving average. The medium term trend is sideways, while the longer term trend of the index remained up.

The fact that FBM KLCI is able to close above the 1300 psychological support level is important in stabilizing the market sentiments. As mentioned in yesterday’s report, the 1308 to 1312 levels will be the immediate overhead resistance zone; if a follow-through on the technical rebound is able to bring the index through this zone, the benchmark index may go higher to re-test the recent high of 1334. The strong support zone lies at 1265 to 1280.

Today, the FBM KLCI is likely to trade within a range of 1292 to 1314.

This week's expected range: 1277 – 1359
Today’s expected range: 1292 – 1314

Resistance: 1306, 1310, 1314
Support: 1292, 1296, 1299

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Thursday, March 18, 2010

FBM KLCI - technical rebound

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