Millionaire Trend Trader: FBM KLCI

Thursday, May 27, 2010

FBM KLCI - down for ninth days

Stocks on Bursa Malaysia ended steadier yesterday in line with the rebound in regional markets. The FBM KLCI however, ended 1.19 point or 0.1% lower to close at 1248.94, marking its ninth straight days of losses. Losses in SIME, PPB, MISC, and GENM dragged down the key index. Gainers led losers by 426 to 320 while 265 counters were unchanged. Volume declined slightly to 929 million shares worth RM2.109 billion.

The FBM KLCI opened six points higher and hit the intra-day high of 1260.27, gaining as much as 10 points before profit-taking activities sent it to close in the red at 1248.94, just marginally below the psychological support level at 1250. Chart wise, it formed a black candlestick with the body overlapping the previous candle, and a marginally short lower shadow, indicating the fall is slowing down, and possibly a temporary bottom is in the forming.

Currently, the benchmark index is in a critical support level, if this level could not hold, then the index might come down to test the 1224 to 1230 support zone, in which 1228 happen to be the 23.6% Fibonacci retracement level for the full length of the run up from the bottom in March 2009 to the recent high at 1349. After this, the lower support levels would be at 1200 and 1150.

MACD continued to slide southward, indicating the increased in downward momentum. RSI(14) at 17 is into the very bearish zone, and is deeply oversold for the short term. Stochastic at 4.72 is also into the deeply oversold zone, and indicate very weak market strength. In view of the deeply oversold situation, a technical rebound is likely to happen anytime.

The FBM KLCI has entered the bear phase, technically, when it closed below the 200-day MA which is now at 1267. The short term trend of the benchmark index is currently down, but the underlying long term trend is still up. The market may remain weak for a while and need to consolidate before it can climb upward again.

Overnight, the DJIA fell 69.30 or 0.69% to close at 9974.45 after gaining as much as 135 points on intra-day. European market rebounded with DAX +87.98 (+1.55%) to close at 5758.02 and FTSE +97.40 (+1.97%) to close at 5038.08.

Today, the market is likely to remain cautious and the FBM KLCI is likely to trade within a range of 1231 to 1265.

This week's expected range: 1230 – 1322
Today’s expected range: 1231 – 1265

Resistance: 1255, 1260, 1265
Support: 1231, 1239, 1244

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Thursday, May 27, 2010

FBM KLCI - down for ninth days

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