Millionaire Trend Trader: FBM KLCI

Friday, July 6, 2012

FBM KLCI - sign of toppishness

Stocks on Bursa Malaysia closed mixed yesterday as sentiment turned cautious ahead of the European Central Bank’s meeting later of the day where key decisions concerning the Eurozone debt crisis will be made. The benchmark FBM KLCI, however, rose 0.68 of a point to 1,614.43, driven by late buying interest in selected blue-chip stocks which pushed the market barometer to its new high. Gainers led losers by 376 to 370 while 344 counters were unchanged. Turnover was higher at 1.116 billion shares worth RM1.388 billion from RM1.082 billion shares worth RM1.696 billion on Wednesday.

The FBM KLCI opened 0.95 point lower at 1,612.80 and rebounded to touch the intra-day high of 1,614.72, just 0.07 of a point below the historical high of 1,614.79, and profit-taking activity which set in pressed the benchmark index to the intra-day low of 1,607.31 at noon, losing 6.44 points at its worst. The afternoon session saw some buying interest on selected blue-chips which pushed the key index gradually higher to close near the highest point of the day, registering another record high in terms of closing. Chart-wise, the FBM KLCI formed a white hanging-man candlestick, a top reversal candlestick pattern, which indicates toppishness and possible reversal of the key index. Immediate downside support zone is at 1,607 to 1,600 while the immediate overhead resistance zone is at 1,615 to 1,621.

MACD and its histogram continued to climb higher, indicating a continued increased in the upward momentum. RSI (14) was marginally higher at 65.9 from 65.6 previously and is turning flat, reflecting the small increment in the key index and a possible pause ahead. Stochastic was higher at 95.5, climbing deep into the short term overbought zone, indicating a very strong market strength, and a possible correction is expected ahead. Readings from the indicators showed that the FBM KLCI is currently in a bullish state but is short term overbought, and a pullback is expected ahead.

The FBM KLCI is currently in a bullish uptrend as it is staying above all the short, medium and long term moving averages. It is showing signs of toppishness with the appearance of a hanging-man candlestick and overbought for the short term, and a correction is likely to happen, which actually offers opportunity to buy quality shares in lower price level. With volume just above the one billion shares mark, the overall market is likely to remain lukewarm with rotational play.

Overnight, the Dow was down -47.15 points or -0.36% to close at 12,896.67. Today, the FBM KLCI is likely to trade within a range of 1,602 to 1,622.

This week's expected range: 1570 – 1631
Today’s expected range: 1602 – 1622

Resistance: 1617, 1620, 1622
Support: 1602, 1604, 1609

Stocks to watch: MISC, MBL, APEX, ADVENTA, MUDAJYA, REDTONE, MALTON, 3A

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Friday, July 6, 2012

FBM KLCI - sign of toppishness

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