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Tuesday, November 2, 2010

FBM KLCI - stood firmly above 1,500

Stocks on Bursa Malaysia ended mixed in range-bound trading yesterday but the key index increased 0.27%, supported by finance and plantation stocks. The FBM KLCI, which hovered at the 1,500 mark, advanced 4.00 points to close at 1509.66 after opening 5.03 points higher at 1510.69. Decliners outnumbered advancers by 440 to 343 while 317 counters were unchanged. Turnover dropped to 1.271 billion shares worth RM1.512 billion from 1.462 billion shares worth RM2.342 billion last Friday.

The FBM KLCI opened with an up gap of 5.03 points at 1510.69, and traded to the intra-day high of 1511.24 within the first five minutes. Heavy profit-taking activities immediately appeared and sent the key index to its intra-day low of 1506.31. The key index hover in a tight range for most part of the day, and a last minute buying of selected key heavyweights pushed the key index to close higher at 1509.66. Chart-wise, the FBM KLCI formed a black spinning-top candlestick which indicates indecision of the key index to move further, and was faced with heavy selling activities. The key index has now stood firm above the 1,500 psychological resistance level, and will try to challenge its next target levels at 1516 and 1524 soon.

MACD has turned upward, albeit still below its signal line, indicates a pick up in the upward momentum. In fact, its histogram has shown the subtle increase in upward momentum since four days ago. RSI (14) continued to climb higher into the overbought zone, and is at 73.8, indicates the key index is getting more bullish. Stochastic at 92.9 has moved higher into the short term overbought zone, and is expected to continue climbing higher. Signals from the indicators indicate that the FBM KLCI has regained its bullishness after the recent consolidation.

The underlying uptrend remained very strong and intact, as shown by the moving averages that are all pointing northeast. Immediate overhead resistance zone is now at 1511 to 1524, while the immediate downside support zone lies at 1500 to 1490. The overall market is expected to remain buoyant with lower liners continued to be in rotational play.

Overnight, the Dow rose a marginal +6.13 points or +0.06% higher to close at 11,124.62. Today, the FBM KLCI is likely to trade within a range of 1501 to 1516.

This week's expected range: 1481 – 1524
Today’s expected range: 1501 – 1516

Resistance: 1512, 1514, 1516
Support: 1501, 1504, 1506


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