Millionaire Trend Trader: Market going for consolidation

Monday, November 23, 2009

Market going for consolidation

The listing of the much awaited MAXIS last Thursday was a non-event, as it did not lift the market to move higher, and the broad market was in a consolidation mood for most of the time last week. The benchmark FBM KLCI opened last week on a positive note at 1272.98, rallied to an intra-week high of 1288.42, and closed the week off-high at 1274.36, posting a week-on-week gain of 3.4 points or 0.27%. Weekly volume traded was slightly higher at 5.2742 billion shares as compared with the previous week’s volume of 5.0721 billion shares.

The price movement of the FBM KLCI formed a shooting-star candlestick on the weekly chart, which signifies a possible market top at last week’s high of 1288.42. Further weakness and downward correction of the key index is anticipated. Weekly MACD has just crossed below its trigger line, indicating possible correction ahead. RSI formed a bearish divergence, but Stochastic remained in the bullish or overbought zone.

The underlying weekly trend as indicated by the moving averages remained up. The short term 10-weeks moving averages which has been providing good support to the current rally will lend support at 1245 level.

On the daily chart, the FBM KLCI formed a black Doji-like candlestick last Friday which indicates uncertainties. It found support on the short term 10-days moving average last Friday at 1274. This support maybe fragile as other indicators is pointing to a possible further correction ahead.

Daily MACD has just crossed below its trigger line with the histogram now turning negative, daily RSI continued to move lower and Stochastic has just move below its 80 mark, indicating further correction is anticipated ahead.

The 30-days moving average which has been supporting the current uptrend may provide good support at 1260 level.

This week, the FBM KLCI is expected to trade within a range of 1250 to 1295, and today, it is expected to trade within the range of 1260 to 1284

This week's expected range: 1245 – 1295
Today's expected range: 1263 – 1284

Resistance: 1277, 1280, 1284
Support: 1263, 1268, 1271

Stock to watch: SALCON, BJCORP

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Monday, November 23, 2009

Market going for consolidation

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