Millionaire Trend Trader: FBM KLCI - bullish momentum likely to persist

Monday, June 25, 2012

FBM KLCI - bullish momentum likely to persist

Stocks on Bursa Malaysia closed firmer last Friday, bolstered by funds buying in heavyweights despite the slide in regional markets on renewed concern over weak global market sentiment. The FBM KLCI edged up 1.64 points or 0.1% to close at 1,603.07 after opening in the red at 1,599.7 and fluctuated between 1,594.44 and 1,608.65. On a Friday-to-Friday basis, the benchmark index gained 22.1 points from previous Friday's closing of 1,579.23. Losers led gainers by 410 to 312 while 331 counters were unchanged. Turnover was at 1.478 billion shares worth RM1.703 billion compared with Thursday’s 1.572 billion shares worth RM1.577 billion. Weekly volume rose to 4.848 billion shares worth RM6.437 billion from previous week's 3.768 billion shares valued at RM7.207 billion.

Taking cue from the favourable result of the Greece’s election, the FBM KLCI opened last Monday with an up gap of 4.12 points at 1,583.35 and climbed to the intra-day high of 1,588.54 but settled with a gain of 3.5 points to close at 1,582.73. Bucking the regional downtrend, the FBM KLCI closed 12.25 points higher at 1,594.98 on Tuesday after opening 1.46 points lower at 1,581.27. On Wednesday, the FBM KLCI closed higher for the third consecutive days with a gain of 9.41 points at 1,604.39 due to active local funds buying of index-linked blue chips. Profit-taking activity set in on Thursday with the FBM KLCI closing lower by 2.96 points at 1,601.43 after opening 1.55 points higher at 1,605.94. Taking cue from a 250 points drop of the Dow overnight, the FBM KLCI opened last Friday 1.73 points lower and fell to the intra-day low of 1,594.44, losing 6.99 points at its worst but rebounded strongly to hit the intra-day high of 1,608.65 before settling with a 1.64 points gain to end the week at 1,603.07.

On the weekly chart, the FBM KLCI formed a bullish white candlestick which gaps away from the previous week’s candlestick, and this indicated a bullish sentiment of the benchmark index. At the same time, the weekly candlestick has gone above all the moving averages which indicated a bullish state. On the daily chart, the FBM KLCI formed a high wave white spinning-top which indicated a very volatile trading day on last Friday, and the market was a bit of uncertain of its direction but with an upward bias. The benchmark index came close to the historical high level of 1,609.33 but was short of 0.68 of a point to break it, and it is likely to stage a re-test of the historical high level this week. A break of the historical high level is likely to see the FBM KLCI moving higher to an uncharted territory with a possible target of 1,632 and 1,661.

Weekly MACD has hooked up, and its histogram also turned shorter for the fourth consecutive bars, indicating a change in the weekly momentum from down to up. Nevertheless, the weekly MACD is still below the weekly signal-line but above the zero-line. Daily MACD was higher but its histogram was slightly shorter, reflecting the correction that took place. Anyway, the underlying tone is still bullish. Weekly RSI (14) was higher at 60.4, indicating the weekly relative strength of the FBM KLCI has just turned bullish. Daily RSI (14) has hooked upward to 64.7, is also in a bullish state. Weekly Stochastic was higher at 69.7, indicating a continuation of the weekly up cycle and improvement of the weekly market strength. However, the daily Stochastic was lower at 92.7, reflecting the pullback in the key index. Readings from both the weekly and daily indicators showed that the FBM KLCI has turned bullish and the upward momentum is likely to send the index to a higher level.

The FBM KLCI has resumed its uptrend as it is now staying above all the short, medium and long term moving averages, and is bullish. It is likely that the benchmark index will re-test and possibly break the historical high level before the listing of Felda Global Ventures Holdings Bhd, scheduled for June 28 as the bullish momentum builds up. With volume in the 1.5 billion shares region, the overall market is likely to see more rotational play coming in.

Last Friday, the Dow rose +67.21 points or +0.53% to close at 12,640.78. This week, the FBM KLCI is likely to trade within a range of 1,559 to 1,636, and for today, it is likely to trade within a range of 1,581 to 1,623.

This week's expected range: 1559 – 1636
Today’s expected range: 1581 – 1623

Resistance: 1610, 1617, 1623
Support: 1581, 1587, 1595

Stocks to watch: PERDANA, IJACOBS, L&G, SEAL, RAMUNIA, CANONE

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Monday, June 25, 2012

FBM KLCI - bullish momentum likely to persist

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