Millionaire Trend Trader: FBM KLCI - higher on technical rebound

Thursday, March 17, 2011

FBM KLCI - higher on technical rebound

Stocks on Bursa Malaysia recouped two straight days of losses to close higher in line with the rebound in Asian markets. However, global equities are expected to be relatively volatile amid growing concerns over the nuclear crisis in Japan after a devastating earthquake and tsunami last Friday. The FBM KLCI ended yesterday 8.30 points or 0.56% higher at 1,492.44. Advancers outnumbered decliners by 548 to 197 with 252 counters unchanged. Turnover was lower at 931.424 million shares worth RM1.471 billion from 1.452 billion shares valued at RM2.116 billion registered on Tuesday.

The FBM KLCI opened 5.77 points higher at 1,489.91 but profit-taking activities pressed it down to the intra-day low of 1,484.71 near noon. Bargain hunters which appeared in the afternoon snapped up selected blue-chips and helped push the key index to close at the day’s high. Chart-wise, the FBM KLCI formed a hammer candlestick in Harami position, which is a bottom reversal signal; however, the market is still very cautious and more data is required to confirm the reversal. The FBM KLCI is currently still staying within its downtrend channel, and yesterday’s reversal could well be just a technical rebound, which could be short lived.

MACD has continued to slide lower, indicating a continuation of the bearish downward momentum. RSI (14) has hooked up to 41.7 and is still in the bearish zone. Stochastic continued to slide lower to 29.5, indicating continued weakness in the FBM KLCI. Readings from the indicators showed that the key index is still bearish and weak, hence, is likely to continue with its consolidation in the near term.

The trend of the FBM KLCI remained down. Immediate strong overhead resistance zone is at 1,495 to 1,510, while the immediate downside support zone is at 1,484 to 1,474. Critical support level to watch is 1,474, if this support is broken, then the key index is likely to slide further downward to 1,450 level.

Overnight, the Dow fell -242.12 points or -2.04% to close at 11,613.30. Today, the FBM KLCI is likely to trade within a range of 1,479 to 1,500.

This week's expected range: 1453 – 1537
Today’s expected range: 1479 – 1500

Resistance: 1495, 1498, 1500
Support: 1479, 1482, 1487

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Thursday, March 17, 2011

FBM KLCI - higher on technical rebound

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