Millionaire Trend Trader: FBM KLCI - rebounded to close above 1500

Wednesday, December 22, 2010

FBM KLCI - rebounded to close above 1500

Stocks on Bursa Malaysia ended yesterday on a firmer note, boosted by fresh buying interest from investors following positive corporate news including several takeover offers within the industry. The FBM KLCI rose 9.3 points or 0.62% to 1505.18 pushed by gains mostly in PLUS Expressways following the fourth new bid involving a RM26 billion takeover offers for the toll operator. Gainers outnumbered losers by 539 to 256, while 284 counters were unchanged. Total volume rose to 1.361 billion shares worth RM1.87 billion compared with Monday’s volume of 1.05 billion shares valued at RM1.6 billion.

The FBM KLCI opened 2.47 points higher at 1498.35 and continued moving higher for most part of the day. It touched the intra-day high of 1510.24 before profit-taking activities pressed it to close off-high at 1505.18. Chart-wise, the FBM KLCI formed a bullish white candlestick which marked a reversal of the near term downtrend of the key index. It, however, requires a follow-through up move and to break above the resistance at 1510 to confirm the reversal.

MACD has hooked up, as shown by the shorter histogram, indicating an initial reversal of the downward momentum. RSI (14) has reversed up and is at 52.5, back to the neutral zone. Stochastic has also hooked up, but still below its slow stochastic, it will require a cross above its slow stochastic to confirm the reversal of the down cycle. Signals from the indicators indicated the first sign of reversal of the key index; nonetheless, it still requires more data to confirm.

The short term trend of the FBM KLCI is still sideways at the moment until a confirmed breakout above the resistance at 1522. The medium and longer term uptrend remained intact. Immediate overhead resistance zone is at 1510 to 1522, while the immediate downside support zone is at 1500 to 1493. With the total volume picking up again, the market is expected to remain active with rotational play on second and third liners.

Overnight, the Dow rose +55.03 points or +0.48% higher to close at 11,533.16. Today the FBM KLCI is likely to trade within a range of 1486 to 1523.

This week's expected range: 1469 – 1539
Today’s expected range: 1486 – 1523

Resistance: 1511, 1517, 1523
Support: 1486, 1492, 1498

Stocks to watch: PETRA, MUDAJYA, LANDMRK, KUB

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Wednesday, December 22, 2010

FBM KLCI - rebounded to close above 1500

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