Millionaire Trend Trader: FBM KLCI

Wednesday, July 21, 2010

FBM KLCI - reversed up

Stocks on Bursa Malaysia rebounded yesterday underpinned by bullish external factors including Wall Street's recovery. The FBM KLCI ended 4.32 points better at 1,337.67 after opening 1.18 points higher at 1,334.532, with continuous buying interest focused on selected heavyweights and lower liners. Gainers outnumbered losers by 466 to 278 while 250 counters were unchanged. Turnover rose to 1.126 billion shares worth RM1.321 billion compared with 848 million shares worth RM1.330 billion on Monday.

The FBM KLCI opened with 1.18 points up gap and traded higher, it touched the intra-day high of 1338.68 and experienced profit-taking which actually kept the key index fluctuating in a narrow range, however, last minute buying of selected heavyweights managed to lift the index to close higher at 1337.67. The price action of the key index formed a bullish white candlestick which confirmed the bottom reversal signal generated by the hammer candlestick formed on Monday. The FBM KLCI may hence continue to move higher today to re-test the recent high of 1341.96. If it is able to clear this resistance level, it may then continue moving higher to test the important psychological resistance at 1350.

MACD continued to move higher but at a slower pace as indicated by its shorter histograms, indicating the current upward momentum is not strong. RSI(14) at 61.7 has hooked up and is back to the bullish zone. Stochastic at 87.2 has hooked up and remained in the overbought zone, indicating short term up cycle is still intact.

The FBM KLCI is now staying above all the short, medium and long term moving averages which will give support to the key index to move higher. The short term trend of the key index is now up, while the medium term trend is sideways and the long term trend remained up.

In view of the increase in trading volume to above 1 billion shares, the market is expected to pick up in momentum. The FBM KLCI is expected to continue tracking the performance of regional key indexes due to a lack of fresh leads locally.

Overnight, the Dow closed +75.53 points or +0.74% higher at 10,229.96. Today, the FBM KLCI is likely to trade within a range of 1330 to 1345.

This week's expected range: 1300 – 1360
Today’s expected range: 1330 – 1345

Resistance: 1339, 1341, 1345
Support: 1330, 1333, 1335

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Wednesday, July 21, 2010

FBM KLCI - reversed up

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