Millionaire Trend Trader: FBM KLCI - higher on continued buying interest

Thursday, June 7, 2012

FBM KLCI - higher on continued buying interest

Stocks on Bursa Malaysia ended in positive territory yesterday on continued buying interest, particularly in finance and plantation counters. Market sentiment was generally lifted by positive leads from regional markets as the overnight positive close on Wall Street amid some upbeat economic data from the United States is contributing to the firm trend in the region. The FBM KLCI rose 9.07 points or 0.58% to close at 1,569.43 after hovering between 1,563.62 and 1,572.30. Advancers led decliners by 397 to 305 while 343 counters were unchanged. Turnover rose to 699.96 million shares worth RM1.14 billion from the 637.97 million shares worth RM923.14 million on Tuesday.

The FBM KLCI opened with an upside gap of 3.29 points at 1,563.65 and moved higher gradually for the day to touch the intra-day high of 1,572.30 just before the closing phase, but last minute profit-taking activity sent the key index lower to close off high. Chart-wise, the FBM KLCI formed a bullish white candlestick with a breakaway gap which indicates buyers were rushing in to the market to bargain hunt after the recent steep fall. With the strong up move yesterday, the FBM KLCI broke through the 1,566-point resistance level and has closed up the down gap which formed on 4^th June 2012, and it is likely to move higher today to test the immediate resistance zone at 1,577 to 1,582. 1,577-point is an important resistance level to watch as this is also where the medium term 50 and 60-day SMA lies now. If the FBM KLCI is able to break through this resistance zone, it is likely that it will move to a higher level.

MACD has reversed up and its histogram was higher than the previous histogram, indicating a pickup in the momentum to the upside. Nevertheless, MACD is still below the zero-line which means it is still generally bearish, but a close of the key index above the 1,582-point level will see the MACD crossing the zero-line and turn bullish. RSI (14) was higher at 51.7 from 47.4 previously, indicating the short term relative strength has moved into the neutral but mildly bullish zone. Stochastic was slightly lower at 63.2 from 65.7 previously and was tapering off, indicating a slow down in the downward momentum but the short term down cycle still remained. Mixed readings from the indicators showed that the FBM KLCI is in a transition stage but with an upward bias.

The general short term trend of the FBM KLCI remained down as the key index is still trapped within the downtrend channel. However, the index has now close above he short term 5, 10, 20 and 30-day SMAs, and is poised to move higher. Immediate strong overhead resistance is expected at the 1,577-point level as this is where the 50 and 60-day SMAs meet the upper resistance line of the downtrend channel, and a break above this level is likely to trigger a rally. A confirmed trend change will occur if the FBM KLCI is able to close above the 1,591-point level.

Overnight, the Dow rose +286.84 points or +2.37% to close at 12,414.79. Today, the FBM KLCI is likely to trade within a range of 1,555 to 1,581.

This week's expected range: 1514 – 1620
Today’s expected range: 1555 – 1581

Resistance: 1574, 1577, 1581
Support: 1555, 1559, 1564

Stocks to watch: DIALOG, JCY, YINSON, TOPGLOV, SUPERMX, WINGTM, MBL

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Thursday, June 7, 2012

FBM KLCI - higher on continued buying interest

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