Millionaire Trend Trader: FBM KLCI

Thursday, November 10, 2011

FBM KLCI - uptrend continued

Stocks on Bursa Malaysia closed higher yesterday, driven by gains on penny stocks and selected blue chips. The local bourse extended its uptrend since last Friday, in tandem with higher regional Asian markets and a firmer overnight Wall Street. The improved sentiment on regional markets was driven by the latest news on developments in Italy's debt crisis, as news of Italian Prime Minister Silvio Berlusconi's impending resignation lifted confidence that a new leader would act more effectively to tackle the country's debt woes. The FBM KLCI rose by 9.18 points or 0.62% to close at 1,489.64 after opening 0.75 point better at 1,481.21. Gainers beat losers by 562 to 222 with 268 counters unchanged. Turnover was higher at 2.677 billion shares worth RM1.818 billion from 1.812 billion shares worth RM1.538 billion.

The FBM KLCI opened 0.75 point higher at 1,481.21 and surged to the intra-day high of 1,490.74 within the first hour of trade, and it pulled back on profit-taking and moved sideways for the rest of the day before a last minute buying of selected heavyweights which pushed it to close near the high of the day. Chart-wise, the FBM KLCI formed a bullish white candlestick which indicates continuation of the current uptrend, and is likely to move higher to re-test the recent high at 1,493.28. If the key index is able to breakthrough this resistance level decisively, then it may rally higher to test the 1,500-point psychological level.

MACD continued to move higher, and the histogram also turned longer for the first time after a five days consolidation, indicating a resumption of the upward momentum. RSI (14) was higher at 62.6, indicating the short term relative strength has turned bullish. Stochastic has crossed above the slow stochastic line and continued to move higher, indicating a continuation of the up cycle and improvement of the market strength. Readings from the indicators showed that the FBM KLCI is gradually turning bullish after the recent correction.

The short term trend of the FBM KLCI remained up, and the medium term trend has turned sideways as the 50 and 60-day moving averages (MA) has tuned flat. The long term outlook is still slightly bearish even though the key index is now above the 360-day MA but is still below most of the longer term MAs. The FBM KLCI will have to break through the strong overhead resistance zone at 1,500 to 1,510 formed by a cluster of long term MAs in order for it to turn fully bullish. The overall market is likely to remain active dominated by trading in penny stocks judging from the high volume but low value traded over the last two day.

Overnight, the Dow fell -389.24 points or -3.20% to close at 11,780.94. Today, the FBM KLCI is likely to trade within a range of 1,474 to 1,500.

This week's expected range: 1433 – 1534
Today’s expected range: 1474 – 1500

Resistance: 1493, 1497, 1500
Support: 1474, 1477, 1483

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Thursday, November 10, 2011

FBM KLCI - uptrend continued

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