Millionaire Trend Trader: FBM KLCI - higher on buying support

Friday, May 27, 2011

FBM KLCI - higher on buying support

Stocks on Bursa Malaysia finished higher yesterday as the bounce on Wall Street overnight and in oil and commodity prices encouraged investors to buy stocks after the recent sell-off. The market was recovering from the recent sell-off that was triggered by mounting concerns over the European financial woes which could derail the recovery of global growth. The FBM KLCI closed 7.37 points or 0.48% better at 1,540.94. Gainers outpaced losers by 417 to 322 while 305 counters were unchanged. Turnover increased to 799.622 million shares valued at RM1.42 billion from Wednesday’s 767.205 million shares worth RM1.4 billion.

The FBM KLCI opened with an up gap of 4.78 points at 1,538.35 and climb to the intra-day high of 1,543.63 at mid morning. It then gradually retrace on profit-taking to close the day at 1,540.94. Chart-wise, the FBM KLCI formed a bullish white candlestick which indicates the bulls were in control and continuation of the recent up move. The FBM KLCI is now closing above all the short term moving averages (MA), and hence has resumed its short term uptrend. However, the key index will have to move beyond 1,550 in order for it to breakout from the consolidation triangle.

MACD has turned upward, marking a positive pick up in market momentum. RSI (14) is at 56 and has continued to move higher into the mildly bullish zone. Stochastic has hooked up and made a cross over its slow stochastic, indicating the beginning of an up cycle after the recent retracement. Readings from the indicators showed that the FBM KLCI has just turned mildly bullish and may continue with its current upward momentum to move higher.

As the FBM KLCI is now closing above all its short term MAs, its short term trend has turned upward. The medium term trend remained sideways, while the long term uptrend is still intact. Immediate overhead resistance zone is at 1,544 to 1,555, where the upper resistance of 1,555 is the trend-line resistance, and 1,550 being the critical psychological resistance level. Immediate downside support zone is at 1,538 to 1,530.

Overnight, the Dow rose +8.10 points or +0.07% to close at 12,402.76. Today, the FBM KLCI is likely to trade within a range of 1,533 to 1,550.

This week's expected range: 1520 – 1565
Today’s expected range: 1533 – 1550

Resistance: 1544, 1547, 1550
Support: 1533, 1535, 1538

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Friday, May 27, 2011

FBM KLCI - higher on buying support

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