Millionaire Trend Trader: FBM KLCI - higher with formation of Doji

Wednesday, July 28, 2010

FBM KLCI - higher with formation of Doji

Stocks on Bursa Malaysia ended mixed yesterday with the benchmark index finishing in positive territory above the critical 1350 psychological resistance level. The FBM KLCI added 0.41 point or 0.03% to close at 1352.23, after opening 0.65 point higher at 1352.47. Losers led gainers by 381 to 308 while 285 counters were unchanged. Volume declined to 731 million shares valued at RM1.33 billion from 850 million shares worth RM1.122 billion on Monday.

The FBM KLCI opened 0.65 point higher and surged to an intra-day high of 1357.23 within the first hour. Heavy profit-taking activities set in and sent the key index down to the intra-day low of 1348.29 before bargain hunting activities lifted it to close marginally higher at 1352.23. This formed a Doji candlestick on the chart which indicates the bull and the bear are equally strong and indecision of the market to move higher after a day of battle. This could signal a possible top, however, it still requires a confirmation. Immediate overhead resistance level is now at 1357 and the support is at 1348.

MACD continued to climb higher, indicating an increase in upward momentum. RSI(14) at 67 has tapered off, however, is still in the bullish zone. Stochastic at 95.7 is moving higher, but is short term overbought, and a possible correction may set in. Signals from the indicators are pointing toward a bullish state of the FBM KLCI, and it is expected to climb higher with intermittent mild correction on profit-taking activities.

The benchmark FBM KLCI is now above all the short, medium and long term moving averages, indicating a bullish state of the key index. The short and long term trends are up, while the medium term trend is sideways. Immediate overhead resistance zone now lies at 1355 to 1383, while the immediate support zone is at 1340 to 1345 provided by the short term 5 and 10-day MA.

Overnight, the Dow closed +12.26 points or +0.12% higher at 10,537.69. Today, the FBM KLCI is likely to trade within a range of 1339 to 1366.

This week's expected range: 1316 – 1375
Today’s expected range: 1339 – 1366

Resistance: 1357, 1361, 1366
Support: 1339, 1344, 1348

Stock to watch: MEASAT, OFI

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Wednesday, July 28, 2010

FBM KLCI - higher with formation of Doji

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