Millionaire Trend Trader: FBM KLCI

Tuesday, July 6, 2010

FBM KLCI - closed below 1300

Stocks on Bursa Malaysia ended mostly lower yesterday in line with most regional markets on mounting concerns about slowdowns in the United States and China. The FBM KLCI suffered six days of straight losses to close 7.94 points or 0.61% lower at 1299.50 as the market came under selling pressure in the late afternoon. Losers outpaced gainers by 425 to 182 while 270 counters were unchanged. Volume dropped to 449 million shares worth RM717 million compared with 626 million shares worth RM974 million last Friday.

The FBM KLCI opened 1.93 point lower and traded in a narrow range in the morning session, however, selling pressure that surfaced in late afternoon pushed the key index lower to close below the psychological support level of 1300 at 1299.50 after hitting the intra-day low of 1298.14. The benchmark index is now below the 120-day moving average (MA), but is supported by the 30-day MA in a fragile position. A break below the 30-day MA at 1298 will see the index moving lower to test the 200-day MA support at 1284.

MACD continued to slide lower after crossing below its signal-line, indicating the downward momentum is picking up pace. RSI(14) at 43 fell lower into the bearish zone, indicating the bear is taking control. Stochastic at 22.5 continued to slide lower, indicating the down cycle is picking up strength. Signals from the indicators point towards a bearish outlook for the benchmark index and more downside is expected ahead for the benchmark index, FBM KLCI.

The current short term trend of the FBM KLCI has turned southward, while the long term trend as indicated by the 200 and 240-day MA is still up. Nonetheless, the long term MAs are converging, which indicates the loss in long term upward momentum, a danger sign in the brewing. The outlook for the FBM KLCI is now bearish.

Wall Street was closed for their national holiday. Today, the FBM KLCI is likely to trade within a range of 1288 to 1309.

This week's expected range: 1260 – 1341
Today’s expected range: 1299 – 1313

Resistance: 1302, 1305, 1309
Support: 1288, 1293, 1296

Stock to watch: TGOFFS

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Tuesday, July 6, 2010

FBM KLCI - closed below 1300

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