Millionaire Trend Trader: FBM KLCI - gradually turning bullish

Tuesday, June 12, 2012

FBM KLCI - gradually turning bullish

Stocks on Bursa Malaysia ended firmer yesterday in line with other regional bourses despite rising concern over the Eurozone financial crisis, as buying support for selected heavyweights kept the FBM KLCI above the 1,570 points level. The FBM KLCI closed 7.79 points or 0.50% higher at 1,578.41 after moving between 1,575.95 and 1,582.29 throughout the trading session. Advancers thumped decliners by 418 to 262 while 320 counters were unchanged. Turnover rose to 732.912 million shares, worth RM1.373 billion, from Friday’s 576.86 million shares worth RM988.39 million.

Taking cue from the strong performance of the Dow last Friday and the Spain bailout news over the weekend, the FBM KLCI opened with an up gap of 5.33 points at 1,575.95 and surged to the intra-day high of 1,582.29 within the first five minutes of trading, and profit-taking activity had kept the benchmark index moving in a sideways range for the rest of the day. Chart-wise, the FBM KLCI formed a white inverted hammer-like candlestick with the close staying just below the mid range of the day, indicating the bears were slightly stronger after a day of battle. The FBM KLCI did try to challenge the resistance at 1,582 but failed to break it, indicating sellers were still strong at level above the 1,580-point and the key index may continues its range-bound consolidation today.

MACD had just crossed the zero-line, flashing a buy signal, and the histogram also turned longer, indicating an improvement in the upward momentum. RSI (14) hooked upward to 55.4 from 51.9, indicating the short term relative strength has moved into the mildly bullish zone. Stochastic was higher at 84.7, indicating an improvement in the market strength and continuation of the short term up cycle, but is short term overbought and a pullback may occur. Readings from the indicators showed that the FBM KLCI is gradually turning bullish, as the MACD has just crossed above the zero-line, and the upward momentum is building up gradually.

The FBM KLCI has just moved above the upper resistance trend line of the downtrend channel and also crossed above the 50 and 60-day SMAs, giving out a bullish indication that the medium term trend of the key index has turned up. However, as it has just breakout, a pullback may occur. The short and long term trend still remained up. Immediate overhead resistance zone is at 1,582 to 1,591 while the immediate downside support zone is at 1,575 to 1,568.

Overnight, the Dow fell -142.97 points or -1.14% to close at 12,411.23. Today, the FBM KLCI is likely to trade within a range of 1,569 to 1,589.

This week's expected range: 1532 – 1603
Today’s expected range: 1569 – 1589

Resistance: 1582, 1586, 1589
Support: 1569, 1572, 1575

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Tuesday, June 12, 2012

FBM KLCI - gradually turning bullish

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