Millionaire Trend Trader: FBM KLCI - up for the fifth consecutive days

Friday, August 20, 2010

FBM KLCI - up for the fifth consecutive days

Stocks on Bursa Malaysia ended higher yesterday with the benchmark index hitting a 31-month high lifted by gains in finance stocks. The FBM KLCI rose 7.05 points or 0.51% higher to close at 1392.56 after opening 1.44 points better at 1386.95. Advancers led decliners by 407 to 321 while 293 counters were unchanged. Total volume dwindled to 983 million shares worth RM1.7 billion, compared with Wednesday’s 998 million shares worth RM1.62 billion.

The FBM KLCI opened with an up gap of 1.44 points and traded in the positive territory throughout the day with active profit-taking, nevertheless, the index continued to close the day at the highest point. The key index formed a bullish white candlestick which indicates the bull was very much in control for the day. It was up for the fifth consecutive days approaching the 1400 level, an immediate psychological resistance level.

MACD continued to climb higher, indicating the continuation of bullish upward momentum. RSI(14) at 77.5 continued to move higher into the very bullish zone, and is short term overbought. Stochastic at 97.8 is overbought and is tapering off indicating very strong market strength. Signals from the indicators are indicating a very bullish state of the benchmark FBM KLCI, but is short term overbought, hence, a pull-back is expected soon.

The underlying short, medium and long term trend of the FBM KLCI remained up. With the key index rising consecutively for five days, and the indicators in the overbought zone, a pull-back of the index is expected. However, with the stronger-than-expected economic figure for second quarter released on Wednesday, the market is expected to remain bullish, hence, any pull-back should be view as an opportunity to accumulate quality stocks at lower price.

Overnight, the Dow fell -144.33 points or -1.39% lower to close at 10,271.21. Today, the FBM KLCI is likely to trade within a range of 1381 to 1399.

This week's expected range: 1327 – 1395
Today’s expected range: 1381 – 1399

Resistance: 1395, 1397, 1399
Support: 1381, 1384, 1388

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Friday, August 20, 2010

FBM KLCI - up for the fifth consecutive days

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