Millionaire Trend Trader: FBM KLCI

Friday, June 8, 2012

FBM KLCI - sign of uncertainty

Stocks on Bursa Malaysia ended on a higher note yesterday on sustained buying interest with investor sentiment buoyed by positive economic developments in Europe and the United States. The local bourse was also tracking the bullish performance of other Asian stock markets while taking cue from the strong showing by Wall Street and European markets. However, some profit taking was seen in the afternoon session, paring down gains made in the morning. The FBM KLCI rose 5.88 points or 0.37% to 1,575.31 after hovering between 1,572.32 and 1,578.76. Advancers led decliners by 411 to 277 while 347 counters were unchanged. Turnover rose to 779.75 million shares worth RM1.45 billion from the 699.96 million shares worth RM1.14 billion on Wednesday.

Taking cue from the strong performance of the Dow overnight, the FBM KLCI opened with an up gap of 5.45 points at 1,574.88 and surged to the intra-day high of 1,578.76 within the first five minutes of trading. Profit-taking activity pressed the key index lower to hit the intra-day low of 1,572.32 before rebounding to close off low. The benchmark index was trading in the positive zone throughout the day. Chart-wise, the FBM KLCI formed a white spinning-top candlestick which indicates the market was undecided about moving forward after two days of strong rebound. With the appearance of a spinning-top yesterday, the FBM KLCI is likely to take a breather to consolidate or correct itself today. Immediate overhead resistance zone is at 1,578 to 1,582 while the downside support is at 1,572.

MACD and its histogram were higher, indicating a continued improvement in the upward momentum. RSI (14) was higher at 54.3 from 51.7 previously, indicating an improvement in the short term relative strength; nevertheless, it is still in the mildly bullish zone. Stochastic was higher at 74.5 and has crossed above the slow stochastic line, indicating a change in the short term cycle from down to up. Readings from the indicators showed that the FBM KLCI is gradually turning mildly bullish, however, MACD is still below the zero-line, and a cross of the MACD over the zero line is required to confirm the return of the bulls.

The general trend of the FBM KLCI remained down as the key index is still trapped within the downtrend channel. However, the short term trend is up as the key index has now close above the short term 5, 10, 20 and 30-day SMAs. The medium term trend is sideways as the 50 and 60-day SMAs was flat while the long term trend remained up. Overall volume remained weak, and the market is likely to stay range-bound until a clear breakout of the overhead resistance at 1,582 is seen.

Overnight, the Dow rose +46.17 points or +0.37% to close at 12,460.96. Today, the FBM KLCI is likely to trade within a range of 1,565 to 1,586.

This week's expected range: 1514 – 1620
Today’s expected range: 1565 – 1586

Resistance: 1579, 1582, 1586
Support: 1565, 1569, 1572

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Friday, June 8, 2012

FBM KLCI - sign of uncertainty

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