Millionaire Trend Trader: FBM KLCI - moving higher steadily

Thursday, July 19, 2012

FBM KLCI - moving higher steadily

Stocks on Bursa Malaysia closed higher for the third consecutive day yesterday, despite cautious trading in the Asian markets. The Asian stock markets were broadly lower during late trade yesterday after US Federal Reserve Chairman gave a bleak assessment of the US economy and failed to signal a fresh round of stimulus to boost growth. The FBM KLCI ended 5.85 points or 0.36% higher at 1,645 after trading between 1,640.39 and 1,645.39 throughout the day. Advancers led decliners by 362 to 358 while 388 counters closed unchanged. Total volume slipped to 1.13 billion shares, valued at RM1.46 billion, from Tuesday’s 1.347 billion shares valued at RM2.013 billion.

Following the rebound on Wall Street overnight, the FBM KLCI opened 1.33 points higher at 1,640.48 and rallied to the intra-day high of 1,645.39 within the first thirty minutes of trading. The key index pulled back on mild profit-taking and moved sideways for a major part of the day, and some last minute buying of selected blue-chips helped pushed the index to close near the day’s high, recording another all-time high. Chart-wise, the FBM KLCI formed a bullish white Marubozu-like candlestick which indicates the bulls were in control and continues to push the benchmark index higher. Immediate overhead resistance zone is at 1,647 to 1,650 while the downside support zone is at 1,640 to 1,632.

MACD and its histogram continued to rise, indicating a continued improvement of the upward momentum. RSI (14) was higher at 76.1 from 73.9 previously, indicating a very bullish state of the FBM KLCI, however, it also mean short term overbought for the benchmark index and a pullback is likely to happen. Stochastic rose higher to 93.6 after crossing the slow stochastic line, indicating a continuation in the up cycle and very strong market strength. Readings from the indicators showed that the FBM KLCI is in a very bullish state but is short term overbought, and a correction is likely to take place soon.

The FBM KLCI is currently in a bullish uptrend, and it has also closed above the middle trend line of the uptrend channel, which means it has a potential of moving higher with the upper channel line as its target. With the current steady upward momentum, it is likely to move higher to the next immediate target of 1,650, follow by 1,661 and 1,700. Total volume remained lukewarm with a high average unit value, indicating a market dominated by bigger fund and not much of retail participation.

Overnight, the Dow rose another +103.16 points or +0.81% to close at 12,908.70. Today, the FBM KLCI is likely to trade within a range of 1,636 to 1,651.

This week's expected range: 1600 – 1650
Today’s expected range: 1636 – 1651

Resistance: 1647, 1649, 1651
Support: 1636, 1638, 1641

Stocks to watch: MISC, SKPETRO, TWSCORP, INGRESS, GTRONIC, SCOMIMR

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Thursday, July 19, 2012

FBM KLCI - moving higher steadily

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