Millionaire Trend Trader: FBM KLCI - higher but lack momentum

Friday, January 14, 2011

FBM KLCI - higher but lack momentum

Stocks on Bursa Malaysia ended broadly higher yesterday, backed by gains in blue-chips led by Genting. Investor confidence was lifted by positive economic numbers from the Euro-zone and US markets. The FBM KLCI rose 5.07 points or 0.32% to 1,571.56 after opening 4.25 points higher at 1,570.74. Gainers led losers by 528 to 341 while 305 were unchanged. Volume increased to 2.704 billion shares valued at RM3.001 billion compared with 2.473 billion shares worth RM2.703 billion on Wednesday.

The FBM KLCI opened with an up gap of 4.25 points at 1570.74 and surged to the intra-day high of 1573.36 within the first twenty minutes. Profit-taking activities emerged and pressed the key index to the intra-day low of 1567.61. The key index rebounded and was hovering in a tight range before last minute buying of selected heavyweights push it to close higher at 1571.56. The price action of the FBM KLCI led to the formation of a Doji candlestick, which indicates indecision of market direction albeit closing higher.

MACD continued to move higher, but its histogram was getting shorter, indicating a slow down in the upward momentum. RSI (14) is at 72.7 and has continued to move higher into the very bullish zone. Stochastic is at 85.6, and has hooked up, indicating a mild pick up in the short term market strength. Weak signals from the indicators hinted that the key index may continue with its range-bound move.

The FBM KLCI has again closed above the short term 5-day moving average (MA), which indicates a resumption of its very short term uptrend. The medium and longer term uptrend remained intact. Immediate strong overhead resistance is now at the record high level of 1576.95, while the downside support is at 1558 to 1550.

The market may see more profit-taking activities today after the recent strong rally and coming to the weekend. Overnight, the Dow fell -23.54 points or -0.20% to close lower at 11,731.90. Today, the FBM KLCI is likely to trade within a range of 1562 to 1579.

This week's expected range: 1485 – 1630
Today’s expected range: 1562 – 1579

Resistance: 1574, 1577, 1579
Support: 1562, 1565, 1568

Stocks to watch: TA, TEBRAU, KINSTEL

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Friday, January 14, 2011

FBM KLCI - higher but lack momentum

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