Millionaire Trend Trader: FBM KLCI

Tuesday, August 24, 2010

FBM KLCI - closing above 1400

Stocks on Bursa Malaysia ended mixed yesterday with the benchmark index continued to advance higher above the 1400 point level, supported by buying interest in banking stocks and heavyweight counters, fuelled by liquidity and expectations of better corporate earnings. The FBM KLCI rose 8.13 points or 0.58% to close at 1403.15 after opening 4.85 points higher at 1399.87. Decliners led advancers by 465 to 291 while 270 counters were unchanged. Turnover was lower at 805 million shares worth RM1.338 billion from 834 million shares worth RM1.341 billion last Friday.

The FBM KLCI opened with an up gap of 4.85 points at 1399.87 and profit-taking activities sent it to the intra-day low of 1396.87, it then climb higher to touched the intra-day high of 1404.31, and was bouncing between the high and low of the day. Last minute buying of selected heavyweights again pushed the key index higher to close at 1403.15. Chart-wise, the key index formed a bullish white candlestick which indicates the bull was very much in control and reflected the strong support for index-link counters. The benchmark index is expected to face immediate heavy resistance at 1408 level.

MACD continued to climb higher indicating the continued picking up in upward momentum. RSI(14) at 80.8 is seriously overbought, nonetheless, it indicates the index is exceptionally strong. Stochastic at 99.3 is also overbought, has hooked down slightly, is indicating a very strong up uptrend. Signals from the indicators are indicating very strong market strength of the key index, and the overbought situation might give the bear an excuse for correction.

The underlying short, medium and long term trend of the FBM KLCI remained in a strong uptrend direction. Immediate overhead resistance zone is at 1408 to 1436 while the immediate support lies at 1390 to 1396. In view of the strong market strength, any correction downward should be viewed as an opportunity to accumulate quality stocks at lower prices.

Overnight, the Dow fell -39.21 points or -0.38% lower to close at 10,174.41. Today, the FBM KLCI is likely to trade within a range of 1391 to 1412.

This week's expected range: 1347 – 1436
Today’s expected range: 1391 – 1412

Resistance: 1406, 1409, 1412
Support: 1391, 1394, 1398

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Tuesday, August 24, 2010

FBM KLCI - closing above 1400

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