Millionaire Trend Trader: FBM KLCI - marginally higher on lower volume

Tuesday, August 10, 2010

FBM KLCI - marginally higher on lower volume

Stocks on Bursa Malaysia ended broadly lower yesterday, but last minute buying of selected heavyweights helped keep the benchmark index in the positive territory. The FBM KLCI rose a marginal 0.21 point or 0.02% to close at 1360.66, after opening 0.11 point higher at 1360.56. Losers outpaced gainers by 402 to 293 while 256 counters were unchanged. Volume declined to 699 million shares worth RM1.065 billion from 866 million shares worth RM1.256 billion last Friday.

The FBM KLCI was basically in a correction mood throughout the day with the index moving in and out of the positive and negative territory in a tight trading range. It hit the intra-day low of 1358.35 before rebounding to touch the intra-day high of 1362.04, but finally settled at 1360.66 to form a Doji candlestick, which indicates indecision in the direction of the key index. The fact that it continued to close above 1360 after touching the low of 1358.35 also indicates good support for the benchmark index at this level. Immediate support for the index remained at 1350 to 1358, while overhead resistance is at 1370.

MACD continued to slide lower indicating the loss in upward momentum for the short term. RSI(14) at 68 has turned flat and continued to stay in the bullish zone. Stochastic at 75.9 continued to slide lower indicating the continuation of a short term down cycle or correction. Signals from the indicators reflected the correction mode of the key index.

The benchmark FBM KLCI has gone into a correction mode since it hit the new high of 1370.52 last week. It is now closing below the 5-day moving average (MA) but above the 10-day MA, indicating a short term correction. A close of the index below the 10-day MA at 1360.01 might see the key index sliding lower to re-test the psychological support at 1350. Nonetheless, the short, medium and long term trend of the key index remained up.

Overnight, the Dow rose +45.19 points or +0.42% to close at 10,698.75. Today, the FBM KLCI is likely to trade within a range of 1353 to 1368.

This week's expected range: 1339 – 1383
Today’s expected range: 1353 – 1368

Resistance: 1363, 1365, 1368
Support: 1353, 1356, 1358

Stock to watch: CBIP, DXN, SCABLE

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Tuesday, August 10, 2010

FBM KLCI - marginally higher on lower volume

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