Millionaire Trend Trader: FBM KLCI - range-bound with a downward bias

Friday, October 1, 2010

FBM KLCI - range-bound with a downward bias

Stocks on Bursa Malaysia ended mixed yesterday in range-bound trade with the benchmark index rising marginally, spurred by strong buying in finance counters led by MAYBANK and RHB Capital. The FBM KLCI rose by 1.72 points to close at 1463.50 after opening 4.06 points higher at 1465.84. Losers led gainers by 399 to 329 while 280 counters were unchanged. Volume rose to 1.052 billion shares worth RM1.718 billion compared with 905 million shares worth RM1.449 billion on Wednesday.

The FBM KLCI opened 4.06 points higher at 1465.84 and touched the intra-day high of briefly before profit-taking activities sent it to the intra-day low of 1461.20, and was hovering between the high and low for the rest of the day. Chart-wise, it formed a small black candlestick which indicates the selling activities were more dominant despite the key index ending higher. The key index is still basically moving in a range-bound or sideways direction in a narrow range with the overhead resistance zone at 1467 to 1480 and immediate support zone at 1440 to 1456.

MACD continued to slide lower, indicating the continuous loss of momentum. RSI (14) at 64.2 is basically flat, reflecting the sideways mode of the key index. Stochastic at 63.5 has hooked down despite the index climbing higher, indicating the downward move is not over yet.

The FBM KLCI is now bound on top by the 10-day moving average (MA) and below by the 5-day MA, and has gone into sideways consolidation for the immediate short term, a breakout in either direction will see the index continue to move in that direction. From the weak readings of the indicators, the key index has a stronger downward bias. Nonetheless, the underlying medium to longer term uptrend still remained intact.

The overall market is expected to continue its current trend of rotational play on the second and third liners while the heavyweights consolidate. Overnight, the Dow fell -47.23 points or -0.44% lower to close at 10,788.05. Today, the FBM KLCI is likely to trade within a range of 1456 to 1471.

This week's expected range: 1403 – 1514
Today’s expected range: 1456 – 1471

Resistance: 1466, 1469, 1471
Support: 1456, 1459, 1461

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Friday, October 1, 2010

FBM KLCI - range-bound with a downward bias

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