Millionaire Trend Trader: FBM KLCI - approaching the historical high level

Wednesday, July 4, 2012

FBM KLCI - approaching the historical high level

Stocks on Bursa Malaysia closed mostly higher yesterday in line with gains in regional markets driven by hopes that policymakers will act to boost growth in view of weak manufacturing data released by major economies, and weaknesses in economic data pointed to more stimulus measures from central banks and interest rate cut. The benchmark FBM KLCI, which stayed above the 1,600-point level, gained 6.89 points or 0.43% to close at 1,607.74. Gainers led losers by 390 to 327 while 323 counters were unchanged. Turnover increased to 1.25 billion shares worth RM1.84 billion from 1.08 billion shares worth RM1.284 billion on Monday.

The FBM KLCI rebounded to open 1.62 points higher at 1,602.47 and continued to climb higher for the rest of the day with intermittent pullback on mild profit-taking activity; it ended yesterday at the highest point of the day. Chart-wise, the FBM KLCI formed a bullish white Marubozu candlestick which gaps away from the previous day’s candlestick. With this bullish price move, the benchmark index is likely to continue its upward momentum to climb higher to re-test the historical peak of 1,611.50 registered on June 25^th.

MACD has swing upward and its histogram also turned longer for the first time after shrinking continuously for six sessions, indicating an increase in the momentum from consolidation mode to up. RSI (14) was higher at 62.97 from previous reading of 59.7, indicating a pickup in the short term relative strength and the key index is turning bullish. Stochastic swung upward to 78 from 66.9, and has crossed above the slow stochastic line, indicating a change in the short term market cycle from down to up. Readings from the indicators showed that the FBM KLCI is again turning bullish after about a week of consolidation.

The short term trend of the FBM KLCI has turned upward and bullish after the recent consolidation, and the medium and longer term uptrend still remained intact. Immediate overhead resistance is at 1,611.50 while the immediate downside support is pegged at the psychological level of 1,600-point. If the FBM KLCI is able to breakthrough this overhead resistance level with conviction, it has a potential of reaching a higher level of 1,631 follows by 1,640 and 1,660 as its immediate upside target levels, and for the longer term it has an upside potential of reaching 1,707 to 1,721.

Overnight, the Dow gained +72.43 points or +0.56% to close at 12,943.82 for a pre-national holiday half day market. Today, the FBM KLCI is likely to trade within a range of 1,598 to 1,613.

This week's expected range: 1570 – 1631
Today’s expected range: 1598 – 1613

Resistance: 1609, 1611, 1613
Support: 1598, 1600, 1604

Stocks to watch: CYPARK, MISC, MBL, MBFHLDG, PENERGY, WEIDA

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Wednesday, July 4, 2012

FBM KLCI - approaching the historical high level

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