Millionaire Trend Trader: FBM KLCI

Thursday, September 22, 2011

FBM KLCI - a technical rebound

Stocks on Bursa Malaysia ended yesterday higher, boosted by buying support from institutional fund managers in selected heavyweights, amid rising fears over the weakening global economy. Sime Darby, the biggest contributor to the FBM KLCI yesterday, pushed the benchmark index up 8.4 points or 0.60% to end at 1,419.04. Advancers led decliners by 350 to 289 while 287 counters were flat. Total market volume fell to 708.059 million shares, worth RM1.156 billion, from Tuesday's 784.626 million units valued at RM1.418 billion.

The FBM KLCI opened 2.81 points higher at 1,413.45 but profit-taking pushed it down to the intra-day low of 1,408.73 within the first ten minutes. The key index then rebounded strongly and climb to the intra-day high of 1,422.35 before late afternoon profit-taking pulled it down to close off high. Chart-wise, the FBM KLCI formed a bullish white candlestick, together with the Doji formed a day earlier they formed the morning star bottom reversal pattern. However, as the candle yesterday could not close above the mid point of the long black candlestick at 1,423, the strength of the reversal is considered weak. As the main trend is still down, the up move yesterday may just be a technical rebound in a bear trend. If the rebound found no follow through, the key index might continue with its downtrend.

MACD was tapering off, while the histogram has turned slightly shorter upward, reflecting the rebound. RSI (14) has hooked upward to 31.7, reflecting the rebound, but is still in the bearish zone. Stochastic was higher at 9.7, and has crossed above its slow stochastic line, indicating a possible bottom reversal. Readings from the indicators showed that the FBM KLCI is undergoing a rebound, amid an overall bearish picture.

The trend of the FBM KLCI remained down and bearish. The up move yesterday may just be a technical rebound in a downtrend, and could be short lived. Immediate overhead resistance zone is at 1,423 to 1,442, while the immediate downside support zone is at 1,408 to 1,404. Overnight, the Dow fell -283.82 points or -2.49% to close at 11,124.84. Today, the FBM KLCI is likely to trade within a range of 1,397 to 1,436.

This week's expected range: 1380 – 1502
Today’s expected range: 1397 – 1436

Resistance: 1425, 1431, 1436
Support: 1397, 1403, 1411

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Thursday, September 22, 2011

FBM KLCI - a technical rebound

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