Millionaire Trend Trader: FBM KLCI

Wednesday, June 1, 2011

FBM KLCI - bullish breakout

Stocks on Bursa Malaysia closed higher yesterday on late buying of blue chips, particularly finance and plantation-related stocks. Sentiment was fuelled by gains in Asian bourses following the release of Japan's April industrial production data which rose 1 per cent for April compared with March. The FBM KLCI rose 15.45 points or 1% to end at 1,558.29, after opening 1.34 points lower at 1,541.5. Gainers led losers by 473 to 346 while 285 counters were unchanged. Turnover increased to 1.296 billion shares, valued at RM4.279 billion, compared with 681.366 million shares worth RM1.241 billion on Monday.

The FBM KLCI opened 1.34 points lower at 1,541.50 and rebounded to the morning session high of 1,551.97 within the first forty minutes and hovers in the 1,550 region throughout the rest of morning session. The benchmark index started to move higher after the opening bell in the afternoon session and surged to the intra-day high of 1,566.29 before profit-taking pressed it to close off high at 1,558.29. Chart-wise, the FBM KLCI formed a bullish engulfing candlestick which is a strong reversal signal after a day of pullback on Monday. With this strong up move, the FBM KLCI has breakthrough both the 1,550 psychological resistance and the 1,555 downtrend line resistance levels, and is likely to continue its upward momentum to climb higher to re-test the historical high of 1,576.95 registered on 6th Jan 2011. However, immediate strong overhead resistance level is at 1,565.

MACD surged higher, indicating a strong increase in the upward momentum. RSI (14) reversed up to 63.6, indicating the key index had regained its bullishness. Stochastic is at 83.6 which indicates a strong market strength, and continued to climb higher into the short term overbought zone. Readings from the indicators showed a changed in the market momentum from neutral to strong, and thus the FBM KLCI is likely to continue to climb higher.

The short term trend of the FBM KLCI remained up, and the medium term trend is still sideways, while the long term uptrend is intact. Immediate overhead resistance zone is now at 1,566 to 1,577, while the downside support is at 1,541 to 1,530.

Overnight, the Dow rose +128.21 points or +1.03% to close at 12,569.79. Today, the FBM KLCI is likely to trade within a range of 1,519 to 1,591.

This week's expected range: 1508 – 1576
Today’s expected range: 1519 – 1591

Resistance: 1570, 1581, 1591
Support: 1519, 1530, 1544

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Wednesday, June 1, 2011

FBM KLCI - bullish breakout

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