Millionaire Trend Trader: FBM KLCI

Wednesday, January 12, 2011

FBM KLCI - marginally lower

Stocks on Bursa Malaysia closed mixed yesterday with the key index staying in negative territory throughout the day on profit-taking in selected heavyweights. The FBM KLCI shed 0.58 point or 0.04%, to 1562.94 after opening 4.25 points lower at 1559.27. Advancers led decliners by 437 to 426 while 282 were unchanged. Volume increased to 2.706 billion shares valued at RM2.637 billion from 2.226 billion shares valued at RM2.800 billion on Monday.

The FBM KLCI opened 4.25 points lower at 1559.27 and rebounded to the intra-day high of 1565.33 within the first half an hour, but continued selling pressure arising from profit-taking activities pressed the key index back into the negative territory and was hovering there for the rest of the day. A last minute buying of selected heavyweights helped lift the key index off low to close almost unchanged at 1562.94. Chart-wise, the FBM KLCI formed a small white candlestick in star position, and may potentially form a morning-star, a bottom reversal pattern, pending confirmation today. The FBM KLCI may have seen its temporary bottom at 1558.64, the intra-day low of yesterday.

MACD continued to climb higher, but is tapering off, as shown by its shorter histogram, indicating a slow down in the upward momentum. RSI (14) fell marginally lower to 69.8, is at the borderline of the bullish zone. Stochastic continued to slide lower, and is below its slow stochastic line, indicating the correction is still in progress. Readings from the indicators indicated that the FBM KLCI is still in its correction mode.

The FBM KLCI is currently below its 5-day moving average (MA) but is above its 10-day MA, which is typical during short term correction. The longer term underlying uptrend, however, remained intact. Immediate downside support zone for the FBM KLCI is at 1558 to 1548, while the overhead resistance zone is at 1566 to 1576. The overall market is expected to remain active with rotational play on second and third liners, while the key index may remain range-bound.

Overnight, the Dow rose +34.43 or +0.30% higher to close at 11,671.88. Today, the FBM KLCI is likely to trade within a range of 1552 to 1572.

This week's expected range: 1485 – 1630
Today’s expected range: 1552 – 1572

Resistance: 1566, 1569, 1572
Support: 1552, 1555, 1559

Stocks to watch: TWSCORP, STONE, FAVCO, RAMUNIA

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Wednesday, January 12, 2011

FBM KLCI - marginally lower

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