Millionaire Trend Trader: FBM KLCI - Continue to consolidate

Monday, December 7, 2009

FBM KLCI - Continue to consolidate

Stocks on Bursa Malaysia opened last week with a gap down at 1256.88 due to the Dubai World debt issue. Panic selling sent the FBM KLCI down to the low of 1248.58 briefly, and the index quickly recovered to close at 1259.11 on last Monday. Technical rebound on last Tuesday continued to push the key index higher at 1266.71, and Wednesday, the KLCI managed to close back above the 1270 level, and remained at that level for the rest of the week and closed last Friday at 1270.20, making a small loss of 0.41 point week-on-week. Overall volume for the week stood at 4.071 billion shares worth RM5.640 billion compared with 3.84 billion shares worth RM4.089 billion the week before last week.

On the weekly chart, the FBM KLCI came down and tested the support of the 10-weeks moving average (MA) and rebounded. The 10-weeks MA is now giving the support at 1255.41. The longer term 30-weeks MA at 1169 is still point upward strongly.

Weekly MACD continued to slide down further, and is below its trigger line for the third week, indicating consolidation. Weekly RSI was almost flat at 72.57, whilst weekly Stochastic was lower at 86.96 indicating a market which lack momentum and in consolidation.

On the daily chart, the benchmark index is clearly seen to be consolidating at the 1270 level, which marked an important support level for the current market. It is supported by the short term 10-day MA which is now at 1269.85, a close of the index below this level will see it moving downward further to 1265 level which is where the important 30-days MA is now. The 30-days MA has now turn flat pointing to a sideway mode.

Daily MACD is flat but is still below its trigger line, RSI has hook down slightly, whereas daily Stochastic is pointing upward. The mixed signals of the indicators are pointing toward a possible sideway consolidation market ahead.

As a conclusion, the underlying longer term uptrend of the FBM KLCI is still remained intact and for the immediate short term the market may go sideways.

This week, the FBM KLCI is expected to trade within a range of 1230 to 1288 with the support zone at 1239-1255 and resistance zone at 1279 to 1288.

This week's expected range: 1230 – 1288
Today's expected range: 1266 – 1274
Resistance: 1272, 1274, 1276
Support: 1266, 1268, 1270

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Monday, December 7, 2009

FBM KLCI - Continue to consolidate

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