Millionaire Trend Trader: FBM KLCI - higher on follow through buying

Wednesday, May 30, 2012

FBM KLCI - higher on follow through buying

Stocks on Bursa Malaysia ended higher yesterday in line with the gains in most regional markets despite the Spanish bank worries, as hopes for new measures to boost China’s economy outweighed worries about the health of Spanish banks and their potentials to worsen Europe’s debt crisis, and there were increasing expectations that China would relax its monetary policy and also announce fiscal stimulus measures. The FBM KLCI closed 10.38 points, or 0.67%, higher at 1,565.32, after hovering between 1,552.34 and 1,566.13 throughout the day. Gainers led losers by 416 to 284 while 300 counters were unchanged. Turnover rose to 756.53 million shares, worth RM984.41 million from 735.85 million shares valued at RM897.64 million on Monday.

The FBM KLCI opened 0.94 point lower at 1,554.00 and slipped to the intra-day low of 1,552.34 within the first fifteen minutes of trading, and the key index rebounded to move higher for the rest of the day to touch the intra-day high of 1,566.13 before pulling back to close off high. Chart-wise, the FBM KLCI formed a bullish white candlestick which indicates buyers overwhelmed sellers for the day, and the buying momentum may send the FBM KLCI to a higher level today. Immediate overhead resistance zone is at 1,566 to 1,591 with the gap area at 1,571 to 1,575 acting as a strong barrier to any up move.

MACD continued to climb higher and has just made a golden cross over the signal-line, flashing a buy signal. Nevertheless as the golden-cross occurred below the zero-line it could be just part of a technical rebound. RSI (14) was higher at 50.4, indicating the short term relative strength of the FBM KLCI has just turned neutral from mildly bearish previously. Stochastic was higher at 47.6, indicating an improvement in the market strength and a continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI is gradually turning bullish in the short term, and the upward momentum may carry the index higher.

The short term trend of the FBM KLCI has turned up as the key index is now closing above the 5, 10 and 20-day SMA but is still below the 30, 50 and 60-day SMA. The medium term trend is still down while the long term trend remained up. Currently the FBM KLCI is still trapped within the downtrend channel, and strong resistance is expected at 1,571 to 1,579 zone post by the 30, 50 and 60-day SMAs. If only the FBM KLCI is able to close above this resistance zone and above the 1,591-point level, then only the FBM KLCI is considered to have re-gained its bullish uptrend.

Overnight, the Dow gained +138.12 points or +1.11% to close at 12,592.95. Today, the FBM KLCI is likely to trade within a range of 1,536 to 1,580

This week's expected range: 1517 – 1573
Today’s expected range: 1536 – 1580

Resistance: 1565, 1572, 1580
Support: 1536, 1544, 1550

Stocks to watch: BIMB, MKH, GTRONIC

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Wednesday, May 30, 2012

FBM KLCI - higher on follow through buying

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