Millionaire Trend Trader: FBM KLCI - regained its bullishness

Wednesday, June 20, 2012

FBM KLCI - regained its bullishness

Stocks on Bursa Malaysia closed firmer yesterday, bolstered by buying interest in blue-chip stocks despite the retreat on most regional markets. Although most regional markets were lower on recurring concern that the Eurozone crisis is far from over, European and US equities trended higher on positive sentiment over the Spanish debt auction, and a meeting of the US Federal Reserve later yesterday. The FBM KLCI closed 12.25 points or 0.77% higher at 1,594.98 after opening 1.46 points lower at 1,581.27. Gainers thumped losers by 467 to 264 while 300 counters were unchanged. Turnover softened slightly to 932.560 million shares worth RM1.459 billion from the 941.093 million units valued at RM1.637 billion posted on Monday.

The FBM KLCI opened 1.46 points lower at 1,581.27 but rebounded to move higher for the rest of the day and ended the day at the highest point to form a bullish white Marubozu candlestick in an engulfing pattern. This represents a very bullish tone of the market and hence the benchmark index is likely to climb higher to test the psychological resistance level of 1,600-point today. If the FBM KLCI is able to breakthrough the 1,600-point successfully, the historical high level of 1,609.33 will be the next higher target.

MACD and its histogram continued to climb higher, indicating an increased in the upward momentum. RSI (14) was higher at 62.5, entering the bullish zone for the first time since breaking below it on April 16, indicating the short term relative strength has regained its bullishness. Stochastic has turned upward to 91.5 and has also crossed above the slow stochastic line, indicating a regained of the market strength and continuation of the short term up cycle. Readings from the indicators showed that the FBM KLCI has regained its bullishness and is likely to move higher.

As mentioned in previous analysis that the FBM KLCI would only turn bullish if it is able to close above the 1,591-point level, and it did. The trend of the FBM KLCI is now up and bullish as it is closing above all the short, medium and long term moving averages. Immediate overhead resistance zone is at 1,597 to 1,609, where 1,597 was a pivot high formed on July 11 2011, and the downside support zone is at 1,581 to 1,570.

Overnight, the Dow gained +95.51 points or +0.75% to close at 12,837.33. Today, the FBM KLCI is likely to trade within a range of 1,572 to 1,609

This week's expected range: 1561 – 1609
Today’s expected range: 1572 – 1609

Resistance: 1600, 1605, 1609
Support: 1572, 1576, 1585

Stocks to watch: MHB, WELLCAL, JCY, CYPARK, YTL

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Wednesday, June 20, 2012

FBM KLCI - regained its bullishness

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