Millionaire Trend Trader: FBM KLCI - continued climbing higher

Thursday, December 29, 2011

FBM KLCI - continued climbing higher

Stocks on Bursa Malaysia closed higher yesterday on late fund buying activities. The key index was likely to end the year above the 1,500 points level driven by a bullish breakout and positive technical readings coupled with rotational window dressing activities. The FBM KLCI rose 3.20 points or 0.21% to close at 1,504.11 after opening 1.18 points lower at 1,499.73. Gainers led losers by 386 to 314 while 312 counters were unchanged. Volume rose to 1.27 billion shares, worth RM904.21 million, from 993.75 million shares, valued at RM743.83 million on Tuesday.

The FBM KLCI opened 1.18 points lower at 1,499.73 and slid lower to 1,495.52 on mild profit-taking activity. The key index then rebounded to gradually recover the lost ground and traded higher for the rest of the day to close near the day’s high. Chart-wise, the FBM KLCI formed a white hangman-like candlestick which may indicate a possible top. However, as the lower shadow was short, it indicates the selling pressure was not intense, and the key index may just take a breather after rising consecutively for five sessions. Immediate strong overhead resistance is at 1,506 posted by the 240-day SMA.

MACD continued to rise, indicating a continued improvement of the key index’s momentum. RSI (14) was higher at 63.9, indicating the relative strength has turned bullish. Stochastic was marginally higher at 99.7, indicating very strong market strength, but is tapering off, as it is deep into the short term overbought zone some pullback is likely to happen. Readings from the indicators showed that the FBM KLCI is getting bullish but is slightly overbought and a pullback on profit-taking may happen.

The trend of the FBM KLCI is up. However, the long term moving averages such as the 240 and 300-day SMA are still posting as a resistance, and the immediate overhead resistance zone is at 1,506 to 1,510. If the key index is able to break above this resistance zone, then it might trigger a rally towards the next higher target of 1,530. Overnight, the Dow fell -139.94 points or -1.14% to close at 12,151.41, and today, the FBM KLCI is likely to trade within a range of 1,489 to 1,514.

This week's expected range: 1441 – 1530
Today’s expected range: 1489 – 1514

Resistance: 1508, 1511, 1514
Support: 1489, 1492, 1498

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Thursday, December 29, 2011

FBM KLCI - continued climbing higher

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