Millionaire Trend Trader: FBM KLCI - closed just above 1,600-point

Tuesday, July 3, 2012

FBM KLCI - closed just above 1,600-point

Stocks on Bursa Malaysia closed higher yesterday on improved sentiment in regional markets after Eurozone leaders agreed on a 120 billion Euro package as a short-term measure to combat the debt crisis. The benchmark FBM KLCI gained 1.70 points or 0.11% from last Friday to close at 1,600.85. Gainers led losers by 412 to 302, while 334 counters were unchanged. Turnover decreased to 1.078 billion shares worth RM1.284 billion from 1.301 billion shares worth RM1.885 billion last Friday.

The FBM KLCI opened 0.72 point higher at 1,599.87 and climbed to the intra-day high of 1605.22 within the first hour of trading, but active profit-taking activity kept the key index from climbing further and slid to close near the opening. Chart-wise, the FBM KLCI formed a white inverted hammer candlestick which indicates the bulls’ effort was met with selling pressure from the bears, and the FBM KLCI is likely to stay range-bound and continue to consolidate today within the flag chart pattern with immediate overhead resistance at 1,605 while the downside support is at 1,591.

MACD is almost flat but its histogram was shorter, indicating the key index is losing its momentum and goes into a consolidation. RSI (14) was marginally higher at 59.7 from 58.8 previously, reflecting the mild gain and the short term relative strength is still in the mildly bullish state. Stochastic, however, has hooked downward to 66.9 from 68.3, indicating an inherent weakness is developing. Mixed readings from the indicators showed that the FBM KLCI is going into a consolidation mode and is likely to stay range-bound.

The overall trend of the FBM KLCI remained up. However, the short term trend is turning sideways as the 5-day SMA has just crossed below the 10-day SMA with the index just floating above these two short term moving averages, and a break below the 5-day SMA at 1,598 would likely see the key index sliding towards the immediate support at 1,591. With the total market volume staying just above 1 billion shares, the overall market is likely to stay quiet with some rotational play on the second and third liners.

Overnight, the Dow fell -8.70 points or -0.07% to close at 12,871.39. Today, the FBM KLCI is likely to trade within a range of 1,593 to 1,611.

This week's expected range: 1570 – 1631
Today’s expected range: 1593 – 1611

Resistance: 1605, 1608, 1611
Support: 1593, 1596, 1598

Stocks to watch : FABER, KIANJOO, TSH, HOHUP, IVORY, SCOPE

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Tuesday, July 3, 2012

FBM KLCI - closed just above 1,600-point

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