Millionaire Trend Trader: FBM KLCI

Wednesday, March 9, 2011

FBM KLCI - in consolidation

Stocks on Bursa Malaysia rebounded yesterday on bargain hunting led by gains in selected finance stocks and blue-chips stocks. Regional stock markets were also higher as crude oil prices fell after embattled Libyan leader Muammar Gaddafi was believed to be looking for an agreement to step down. However, investor sentiment remained cautious on the back of a weaker overnight close on Wall Street. The FBM KLCI rose 1.92 points or 0.13% to close at 1,517.66 after opening 3.68 points higher at 1,519.42. Gainers outpaced losers by 529 to 223 while 259 counters were unchanged. Turnover rose to 1.17 billion shares worth RM1.75 billion from 714.797 million shares worth RM1.097 billion recorded on Monday.

The FBM KLCI opened 3.68 points higher and surged to the intra-day high of 1,525.01 within the first fifteen minutes. Heavy profit-taking activities immediately appeared which pressed the key index to the intra-day low of 1,515.17 before bargain-hunting activities lifted the key index to close off low. Chart-wise, the FBM KLCI formed a black spinning-top candlestick with a longer upper shadow which indicates indecision of market direction, and the longer upper shadow also showed that selling pressure at level above 1,520 was high. The FBM KLCI is still closing below the neckline of the head-and-shoulder pattern but is above the short term 5, 10 and 20-day moving averages (MA) and the long term 120-day MA. The key index is now in consolidation state, and is faced with the strong overhead resistance zone at 1,520 to 1,528. If it is able to breakout from this resistance zone, it will stage a rally towards the next higher target zone at 1,544 to 1,550.

MACD continued to climb higher, albeit still below the zero-line, indicates a gradual pick up in the upward momentum. RSI (14) has hooked up slightly to 51.2, and is still in the neutral zone. Stochastic has continued to climb higher to 80.5, indicating a continuous gain in strength. Readings from the indicators showed that the FBM KLCI is gradually turning positive in terms of market momentum.

The short term trend of the FBM KLCI has turned up; however, the price action yesterday showed that it is in range-bound consolidation, the medium term trend is sideways, while the long term trend remained up. Immediate overhead resistance zone is at 1,520 to 1,528, while the immediate downside support zone is at 1,510 to 1,500.

Overnight, the Dow rose +124.35 points or +1.03% to close at 12,214.38. Today, the FBM KLCI is likely to trade within a range of 1,503 to 1,535.

This week's expected range: 1453 – 1584
Today’s expected range: 1503 – 1535

Resistance: 1524, 1529, 1535
Support: 1503, 1509, 1513

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Wednesday, March 9, 2011

FBM KLCI - in consolidation

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