Millionaire Trend Trader: FBM KLCI - bullish uptrend mode

Monday, July 9, 2012

FBM KLCI - bullish uptrend mode

Share prices on Bursa Malaysia closed higher last Friday, driven by gains on selected counters. Asian markets, however, fell as the European Central Bank’s decision on Thursday to cut interest rate to a record low failed to excite investors. The FBM KLCI rose by 6.12 points to close at another new record high of 1,620.55, and week-on-week, the benchmark index rose 21.40 points to an all-time high from 1,599.15 the previous week. Gainers led losers by 482 to 281 while 322 counters were unchanged. Turnover increased to 1.14 billion shares worth RM1.52 billion from 1.12 billion shares worth RM1.39 billion on Thursday, while weekly volume decreased to 5.671 billion shares worth RM7.734 billion, from 6.163 billion shares valued at RM8.988 billion the previous week.

The FBM KLCI was basically in an uptrend mode the whole of last week. It opened 0.72 point higher at 1,599.87 on last Monday and ended the day 1.70 points higher to close at 1,600.85 after hitting an intra-day high of 1,605.22. The benchmark index continued to climb higher on Tuesday to close 6.89 points at 1,607.74 in line with gains in regional markets driven by hopes that policymakers will act to boost growth in view of weak manufacturing data released by major economies. Wednesday saw the FBM KLCI moving higher in tandem with the rally in regional bourses hitting a new record intra-day high of 1,614.79 before settling with a gain of 6.01 points at 1,613.75. Bursa Malaysia traded mixed on Thursday with the FBM KLCI going into a profit-taking correction mode for a major part of the day but late buying interest in selected blue-chip stocks pushed the market barometer to close at another new high of 1,614.43 with a marginal gain of 0.68 of a point, and Friday saw some mild profit-taking activity in the first half of the day but continued buying support for blue-chips drove the benchmark to close the week at the all-time high level of 1,620.55.

On the weekly chart, the FBM KLCI formed a bullish white Marubozu candlestick, and on the daily chart, the benchmark index also formed a bullish white candlestick with a short lower shadow but closed at the highest point of the day which indicated strong buying support for blue-chip stocks, and the upward momentum may continue to drive the key index higher this week with an immediate target level of 1,631 follow by 1,641 while the downside support is pegged at the psychological support level of 1,600-point.

Weekly MACD continued to climb higher and has just made a golden-cross over its signal line, flashing a buy signal on the weekly chart. Daily MACD and its histogram also climbed higher indicating continued improvement in the upward momentum. Weekly RSI (14) was higher at 63.1 from previous reading of 59.3, and the daily RSI (14) was also higher at 68.5. Both weekly and daily RSI values showed that the key index is in a bullish mode and may climb higher. Weekly Stochastic was higher at 92.9 and the daily Stochastic was also higher at 98.8, indicating very strong market strength but both readings indicated that the key index has entered the short term overbought zone. Readings from both the weekly and daily indicators showed that the FBM KLCI is currently in a bullish state with strong upward momentum but is slightly overbought and some profit-taking might be expected ahead.

The FBM KLCI is currently in a bullish uptrend mode as it is staying above all the short, medium and long term moving averages. The benchmark index is likely to continue to scale new high into the uncharted territory this week with an immediate target level of 1,631 followed by 1,641 which is expected to be a strong resistance zone; and from the longer term perspective the FBM KLCI has an upside target of 1,660 which is the 1.618% Fibonacci expansion level measuring from the pivot high of 1,609.33 registered on April 3^rd to the pivot low of 1,526.6 registered on 18^th May.

Last Friday, the Dow fell -124.20 points or -0.96% to close at 12,772.47. This week, the FBM KLCI is likely to trade within a range of 1,585 to 1,641, and for today, it is likely to trade within a range of 1,608 to 1,628.

This week's expected range: 1585 – 1641
Today’s expected range: 1608 – 1628

Resistance: 1623, 1626, 1628
Support: 1608, 1610, 1615

Stocks to watch: CYPARK, MBFHLDG, REDTONE, MALTON, SCOPE

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Monday, July 9, 2012

FBM KLCI - bullish uptrend mode

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