Millionaire Trend Trader: FBM KLCI - range bound with an upward bias

Friday, May 20, 2011

FBM KLCI - range bound with an upward bias

Stocks on Bursa Malaysia ended higher yesterday on renewed buying interest by local and foreign institutional in selected key heavyweights and second liners. The market pared gains soon after a firm start following Wall Street’s positive performance overnight. The FBM KLCI finished 2.75 points or 0.18% better at 1,544.02, after opening 2.11 points higher at 1,543.38. Advancers and decliners were equal at 371 counters, while 318 counters were unchanged. Turnover declined to 890.85 million shares worth RM1.48 billion from 993.7 million shares valued at RM1.912 billion recorded on Wednesday.

Taking cue from the steady performance of Wall Street overnight, the FBM KLCI opened with an up gap of 2.11 points higher at 1,543.38 and surged to the intra-day high of 1,550.62 within the first ten minutes. However, profit-taking activities immediately surfaced and sent the benchmark index to the intra-day low of 1,541.97 before rebounding to close at 1,544.02. Chart-wise, the FBM KLCI formed a spinning-top candlestick with a long upper shadow, which indicates selling pressure was strong when the key index approached the psychological resistance level of 1,550, and the market was hesitant to move higher. Nonetheless, the overall market sentiment is still positive, and the FBM KLCI may continue to challenge the 1,550 level today.

MACD continued to climb higher, indicating a continuation in the upward momentum. RSI (14) at 59.1 is approaching the bullish zone, which shows that the key index is gradually gaining its strength. Stochastic hooked downward slightly to 83.3, reflecting the pullback from the intra-day high. Readings from the indicators showed that the FBM KLCI is gradually gaining momentum and strength, and is poised to move higher.

The underlying short term trend of the FBM KLCI remained up, while the medium term trend is sideways, and the long term uptrend is still intact. From a broader angle, the FBM KLCI is still in a range-bound situation, where it will have to move above the 1,565 and 1,577-point level in order to breakout from the range-bound situation. Immediate overhead resistance zone is at 1,550 to 1,565, while the immediate downside support zone is at 1,537 to 1,530. With the dwindling volume, the FBM KLCI may continue to remain range-bound but with an upward bias.

Overnight, the Dow rose +45.14 points or +0.36% to close at 12,605.32. Today, the FBM KLCI is likely to trade within a range of 1,531 to 1,560.

This week's expected range: 1492 – 1575
Today’s expected range: 1531 – 1560

Resistance: 1549, 1555, 1560
Support: 1531, 1536, 1540

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Friday, May 20, 2011

FBM KLCI - range bound with an upward bias

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