Millionaire Trend Trader: FBM KLCI - lower on selling pressure

Friday, December 17, 2010

FBM KLCI - lower on selling pressure

Stocks on Bursa Malaysia ended broadly lower yesterday on extended sell-off amid weak trading across global markets. The benchmark FBM KLCI fell 11.58 points or 0.77% to 1497.52, after opening 2.0 points lower at 1507.10. Market breadth was negative with losers leading gainers by 473 to 256 while 296 counters were unchanged. A total of 1.275 billion shares valued at RM1.816 billion were traded against 1.119 billion shares worth RM1.764 billion on Wednesday.

The FBM KLCI opened with a down gap of 2 points at 1507.10, which is the intra-day high, and slid downward with intermittent rebound for most part of the day. It touched the intra-day low of 1495.39 before rebounding to close off-low at 1497.52. Chart-wise, the FBM KLCI formed a long black candlestick which indicates sellers were dominant throughout the day in pushing prices lower. The key index is likely to slide lower, but will receive good support at 1492 level provided by the 60-day moving average (MA), which has been providing good support to the uptrend.

MACD turned downward and made a dead-cross, which is a sell signal, indicates the momentum has turned weak, and the consolidation is likely to prolong. RSI (14) at 47.6 has turned mildly bearish. Stochastic at 64.8 has continued to slide lower, indicating a continuation of the down cycle. Readings from the indicators indicate that the FBM KLCI is turning weak to bearish for the short term, and may continue to consolidate.
The short term trend of the FBM KLCI has turned down or bearish, as it is now closing below the 30-day MA which provides a guide to the short term trend direction. The medium term trend as represented by the 60-day MA will be challenge soon; nonetheless, it is still up at the moment. The long term uptrend is still intact. The immediate downside support zone is at 1492 to 1474, while the resistance zone is at 1507 to 1523.

For the near term, the FBM KLCI is likely to continue its consolidation, while the overall market will be in rotational play. Overnight, the Dow rebounded +41.78 points or +0.36% higher to close at 11,499.25. Today, the FBM KLCI is likely to trade within a range of 1481 to 1519.

This week's expected range: 1470 – 1548
Today’s expected range: 1481 – 1519

Resistance: 1505, 1512, 1519
Support: 1481, 1488, 1492

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Friday, December 17, 2010

FBM KLCI - lower on selling pressure

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