FBM KLCI - Breakouts

FBM KLCI - Breakouts

Stocks on Bursa Malaysia closed higher last Friday tracking the positive regional markets. The benchmark FBM KLCI closed 2.55 points or 0.14% better at 1,834.52, after hovering between 1,829.74 and 1,836.82 throughout the day. On a Friday-to-Friday basis, the FBM KLCI gained 21.15 points from 1,813.37 on previous Friday. Gainers outpaced losers by 383 to 360, while 345 counters were unchanged. Total volume was lower at 1.78 billion units worth RM1.28 billion from Thursday’s 2.16 billion units worth RM2.03 billion. Weekly turnover increased to 10.94 billion units worth RM9.06 billion from previous week’s 10.21 billion units worth RM9.5 billion.

Taking cue from the rebound on Wall Street the previous Friday, the FBM KLCI opened last Monday 2.15 points higher at 1,815.52 but slipped lower to hit the intra-day as well as the intra-week low of 1,815.02 briefly after opening. The key index rebounded from the low to close 8.46 points higher at 1,821.83 points on optimism which fuelled the market as a spillover effect from regional bourses, with China stocks nearing a seven-year high on hopes for more infrastructure spending and policy stimulus. The FBM KLCI ended Tuesday on a firm note to close the first quarter 8.95 points higher at 1,830.78 points, advancing 3.95% year-to-date on window dressing activity. Wednesday saw the FBM KLCI easing 4.47 points to 1,826.31 points on profit-taking as traders were increasingly concerned over the continuously depressed crude oil prices, Greek debt issues, as well as the implementation of the goods and services tax (GST). The FBM KLCI ended Thursday 5.66 points higher at 1,831.97 amid a firmer broader market as funds were seen picking up index linked stocks in line with firmer key regional bourses as the US dollar weakened, and Friday saw the benchmark index making small advances to close the week positively.

On the weekly chart, the FBM KLCI formed a bullish white candlestick which continued the uptrend from the previous week and closed above the immediate resistance of 1,831.41. Hence, the FBM KLCI is likely to continue its upward move to climb higher in the coming week. On the daily chart, the FBM KLCI formed a white spinning-top candlestick which indicates uncertainty of market direction but with an upward bias. Hence, the FBM KLCI is likely to stay in range-bound consolidation today but with an upward bias. Immediate overhead resistance zone is at 1,836 to 1,845, while the immediate downside support zone is at 1,829 to 1,823.

Weekly MACD, which is below the zero-line, climbed higher and is approaching the zero-line, and its histogram extended upward, indicating an increased in the weekly momentum to the upside. Daily MACD, which is above the zero-line, rose further, and its histogram increased marginally upward, indicating a mild increased in the daily momentum. Weekly RSI (14) was higher at 55.9 from 52.3, indicating an increased in the weekly relative strength to the mildly bullish side from the neutral zone. Daily RSI (14) was higher at 63.7 from 62.7, indicating a mild improvement in the daily relative strength in the bullish zone. Weekly Stochastic was higher at 88.4 from 78.5, and made a golden-cross over the weekly slow stochastic line, issuing a stochastic buy signal on the weekly chart. Daily Stochastic, however, hooked downward slightly to 94.4 from 94.6, indicating possible consolidation ahead after the key index hit the overbought zone. Readings from the weekly indicators showed that the FBM KLCI is gaining strength on the weekly perspective, while on the daily chart the key index is treading cautiously. Hence, the FBM KLCI is likely to move higher cautiously in the coming week.

The trend of the FBM KLCI has turned up or bullish with the key index breaking the tough overhead resistance level at 1,831.41 registered on February 4th, 2015, and the FBM KLCI is now closing above the short, medium and long term simple moving averages (SMA). The FBM KLCI has also break above the upper resistance line of the downtrend channel, signifying the downtrend which started on July 8th, 2014 after the key index hit the all-time high of 1,896.23 was over, technically. Hence, the FBM KLCI is likely to embark on a new uptrend which will see the key index moving higher to test the all-time high level of 1,896.23 in the medium term. On the other hand, if the breakout fails, and the FBM KLCI falls below the 1,831 points level, prolong sideways range-bound consolidation can be expected.

Last Friday, the US market was closed for Easter holiday and the Dow rose 65.06 points or 0.37% to close at 17,763.24 on Thursday. This week, the FBMKLCI is likely to trade within a range of 1,798 to 1,858, and today, the FBMKLCI is likely to trade within a range of 1,823 to 1,843.

This week's expected range: 1798 – 1858
Today’s expected range: 1823 – 1843

Resistance: 1837, 1840, 1843
Support: 1823, 1826, 1830

Stocks to watch: BJCORP, BIOOSMO, CMSB, EDEN, EURO, K1, KAREX, LANDMRK, MAA, MIKROMB, MITRA, MULPHAL, NICE, NYLEX, POHKONG, PWROOT, PRG, SBCCORP, SCC, SOLUTN, SYCAL, TEKSENG, TROP, WILLOW

Stock pick highlight: POHKONG (5080)

Last Price: RM0.54 +0.03
Support Level: RM0.505, RM0.47
Resistance Level: RM0.55, RM0.565, RM0.585, RM0.60, RM0.61, RM0.625, RM0.645, RM0.665, RM0.725
Entry Level: RM0.54 – RM0.55

Technical Analysis

POHKONG (5080) rebounded from its intra-day low of 0.505 to close higher at the intra-day high of 0.54. Technically, the chart of POHKONG formed a bullish white candlestick with increasing volume, indicating strong buying interest came into the stock on Friday. It breaks out from the consolidation range forming a Rectangle pattern breakout. MACD climbed upward and its histogram also extended upward, indicating an increased in momentum to the upside and a buy signal. RSI (14) rose to 80.5 from 75.5, indicating the stock is turning very bullish and is overbought. Stochastic rose upward to 87.9 from 83.6 and is above the slow stochastic line, indicating the stock is turning stronger after recent consolidation. The medium and long term trend of POHKONG is up, and the short term trend is up with the 5-day SMA above the 10-day SMA and is also above the 30-day SMA, and a confirmed breakout above RM0.55 will see an upside target of RM0.565, follow by RM0.60, RM0.61, RM0.47, RM0.625, RM0.645, RM0.665 and RM0.725.

Since the short term trend is bullish, day traders with shorter time frame perspective may ride on the short term bullishness and buy on breakout level (RM0.55). Those with lower risk appetite should wait at the side-line and buy on the dip.

Price Objective
Short Term – target price at (RM0.565, RM0.585, RM0.60, RM0.61), stop loss (RM0.495)
Mid Term – target price at (RM0.625, RM0.645, RM0.665, RM0.725), stop loss (RM0.465)

Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. The Stocks to watch is not a recommendation to buy or sell the particular stock, as it is only meant for graduates of the "Share Trading the Pro Way" course as case study. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

 http://millionairetrendtrader.blogspot.com