Millionaire Trend Trader: FBM KLCI - rebounded to close higher

Friday, May 25, 2012

FBM KLCI - rebounded to close higher

Stocks on Bursa Malaysia ended higher yesterday, driven by gains in most heavyweight counters. However, growing concerns about Greece exiting the Eurozone capped gains, and equities remained vulnerable to more sell-offs. The FBM KLCI closed at its intra-day high of 1,548.25, 8.54 points or 0.55% higher after hitting the intra-day low of 1,540.49. Gainers led losers by 386 to 274 while 344 counters were unchanged. Turnover decreased to 817.46 million shares worth RM1.31 billion from the 960.848 million shares valued at RM1.288 billion on Wednesday.

The FBM KLCI opened 0.87 of a point higher at 1,540.58 and slipped marginally lower to the intra-day low of 1,540.49, it then rebounded and moved higher for the rest of the day with intermittent mild profit-taking before ending at the highest point of the day. Chart-wise, the FBM KLCI formed a bullish white Marubozu candlestick which indicates buyers were in control for the day, and the bullish momentum may send the key index higher today. Immediate overhead resistance zone is envisaged at 1,552 to 1,559, while the immediate downside support zone is at 1,540 to 1,535.

MACD has hooked up for the first time after two weeks of continuous fall, and its histogram also turned shorter upward for the fourth consecutive bars, indicating a possible changed in the momentum from down to up. RSI (14) was higher at 40.9, indicating the short term relative strength of the FBM KLCI has improved from bearish to moderately bearish. Stochastic was higher at 28.4, indicating a continued improvement of the market strength and also a continuation of the up cycle. Readings from the indicators showed that the FBM KLCI is currently undergoing a rebound and the technical outlook has improved from bearish to moderately bearish. Nevertheless, this could be just a technical rebound from a bigger picture.

The overall trend of the FBM KLCI remained down. However, it has now closed above the very short term 5-day SMA and the long term 120-day SMA, and it may continues its rebound to move higher. An important resistance level that the key index must break now is the 1,550-point psychological resistance level, which coincides with the 10-day SMA, and a break above this psychological level would also mean the key index would cross above the middle trend line of the downtrend channel, and is likely to see the key index moving higher to test the upper boundary of the downtrend channel. Unless and until the FBM KLCI close above the upper downtrend line which is currently at 1,575, the trend is still considered down.

Overnight, the Dow gained +33.60 points or +0.27% to close at 12,529.75. Today, the FBM KLCI is likely to trade within a range of 1,535 to 1,556.

This week's expected range: 1489 – 1606
Today’s expected range: 1535 – 1556

Resistance: 1551, 1554, 1556
Support: 1535, 1537, 1543

Stocks to watch: MPHB, CSL, MBL, STEMLFE

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Friday, May 25, 2012

FBM KLCI - rebounded to close higher

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