Millionaire Trend Trader: FBM KLCI - higher on technical rebound

Tuesday, April 19, 2011

FBM KLCI - higher on technical rebound

Stocks on Bursa Malaysia rebounded yesterday to end better despite a lukewarm regional market. While further gains was capped by profit-taking in plantation-related stocks, the benchmark FBM KLCI rose 5.98 points or 0.39% to close at 1,527.92, after opening 4.09 points better at 1,526.03. Gainers outpaced losers by 446 to 277 while 286 counters were unchanged. Turnover rose to 1.032 billion shares worth RM1.496 billion from 915.038 million shares valued at RM1.565 billion last Friday.

In response to the results of the Sarawak state election, the FBM KLCI opened with an up gap of 4.09 points and surged to the intra-day high of 1,533.18 within the first ninety minutes of trade, making a gain of 11.24 points at its best. The key index then pulled back on profit-taking but remained in the positive territory throughout the day. Chart-wise, the FBM KLCI formed an inverted hammer candlestick which indicates buyers were initially very strong in pushing the index, but sellers later surfaced to sell down for quick gains. With this candle formation, the FBM KLCI is likely to remain range-bound today.

MACD continued to slide lower, albeit still above the zero line, indicates a continued loss in the upward momentum and a state of consolidation. RSI (14) has hooked up to 49.2, but is still below the 50 level, indicating the key index is in the neutral zone with a bearish bias. Stochastic continued to slide lower to 21.1, indicating a continuation of the short term down cycle and very weak market strength. Readings from the indicators showed that the FBM KLCI is in a consolidation mode with a downward bias.

The short term trend of the FBM KLCI remained down, as it is closing below the short term 5, 10 and 20-day moving averages (MA). The medium term trend remained sideways while the long term uptrend is still intact. Immediate overhead resistance zone is at 1,533 to 1,541, while the immediate downside support zone is at 1,523 to 1,517. The support at 1,517 is especially critical, as a break below this level will likely see the key index sliding lower towards the 1,510 to 1,500 zone.

Overnight, the Dow fell -140.24 points or -1.14% to close at 12,201.59. Today, the FBM KLCI is likely to trade within a range of 1,515 to 1,542.

This week's expected range: 1464 – 1576
Today’s expected range: 1515 – 1542

Resistance: 1533, 1538, 1542
Support: 1515, 1519, 1523

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Tuesday, April 19, 2011

FBM KLCI - higher on technical rebound

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