Millionaire Trend Trader: FBM KLCI - closing at another record high

Thursday, July 12, 2012

FBM KLCI - closing at another record high

Stocks on Bursa Malaysia closed on a firm note again yesterday, buoyed by persistent buying interests in selected blue-chips. The benchmark FBM KLCI rose 5.16 points or 0.32% to a high of 1,629.45 after opening 3.23 points lower at 1,621.06. The index touched an intra-day high of 1,632.15. Gainers led losers by 406 to 364 while 340 counters were unchanged. Turnover rose to 1.34 billion shares worth RM2.49 billion from Tuesday’s 1.13 billion shares worth RM1.54 billion.

Taking cue from the weak overnight performance of Wall Street, the FBM KLCI opened 3.23 points lower at the intra-day low of 1,621.06 and rebounded to move higher gradually for the rest of the day. The key index hits another new record intra-day high of 1,632.15 at mid afternoon but the rise could not sustained and retreated on heavy profit taking activity. Chart-wise, the FBM KLCI formed a bullish white candlestick which indicates the bulls were still in control, and may attempt to move higher today.

MACD and its histogram are both higher, indicating a continued increased in the upward momentum. RSI (14) was higher at 72.1, indicating a very bullish state of the FBM KLCI but is short term overbought, and a pullback is likely to happen. Stochastic, on the other hand, has turned downward to 96.4 from 99, and has crossed below the slow stochastic line, indicating a pullback correction might take place anytime. Readings from the indicators showed that the FBM KLCI is in a very bullish state but is short term overbought, and is poised for a correction.

The FBM KLCI is currently in a bullish uptrend as it is staying above all the moving averages. However, it has hit onto the middle resistance trend line of the uptrend channel and pullback below it. If the key index is able to close above this resistance trend line, then it has a strong likelihood of moving higher to the upper trend line region which is now at 1,690 to 1,700. Immediate overhead resistance is now at 1,632, and if the benchmark index can breakthrough this resistance level convincingly, it might climb to the next target level of 1,641. Nonetheless, chances that the FBM KLCI may pullback on correction is becoming higher as it has risen for the past eight out of ten sessions and the stochastic oscillator has shown that weakness is surfacing.

Overnight, the Dow fell -48.59 points or -0.38% for the fifth consecutive sessions to close at 12,604.53. Today, the FBM KLCI is likely to trade within a range of 1,611 to 1,643.

This week's expected range: 1585 – 1641
Today’s expected range: 1611 – 1643

Resistance: 1634, 1639, 1643
Support: 1611, 1616, 1622

Stocks to watch: REDTONE, MALTONE, HIBISCS, KFIMA, JOHOTIN, SCOPE, KINSTEEL

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Thursday, July 12, 2012

FBM KLCI - closing at another record high

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