Millionaire Trend Trader: FBM KLCI - down for the sixth consecutive days

Thursday, January 27, 2011

FBM KLCI - down for the sixth consecutive days

Stocks on Bursa Malaysia ended lower yesterday for the sixth consecutive days pull down by plantation stocks as investors’ interest waned ahead of a short trading period due to the Chinese New Year celebrations next week. Bank Negara is due to announce its monetary policy decision today. The FBM KLCI loss 6.43 points or 0.42% to 1,520.00 after opening one point lower at 1,525.43 and hit the intra-day low of 1505.36. Decliners led advancers by 418 to 328 while 311 counters were unchanged. Volume dwindled to 1.420 billion shares worth RM2.601 billion from Tuesday's 1.951 billion shares valued at RM2.439 billion.

The FBM KLCI opened 1 point lower at 1525.43 and plunged to the intra-day low of 1505.36 within the first thirty minutes of the day, losing 21.07 points at its worst, but was quickly rebounded and closed off low at 1520.00. Chart-wise, the FBM KLCI formed a hammer candlestick, which is a bottom reversal signal. It indicates strong buying support by bargain-hunters when the key index fell to level near the psychological support of 1500. The key index may see further rebound today and 1525 would be an important resistance level to watch, as it is the 50% Fibonacci retracement level.

MACD continued to slide lower, as shown by the longer histogram southward, indicating the downward momentum is picking up steam. RSI (14) is lower at 38.5, indicating the FBM KLCI is in a very bearish state. Stochastic is at 14, and continued to slide lower into the oversold zone, indicating the market strength is very weak at the moment and the down cycle may continue. Readings from the indicators shows a very weak and bearish condition of the FBM KLCI for the short term.

The short term trend of the FBM KLCI remained to be down, while its medium and long term uptrend is still intact. The key index is now closing right on the medium term 60-day moving average, which post as a critical support for the medium term trend of the FBM KLCI. If this level could not hold, then the key index may continue its downtrend to the 1500 to 1480 zone.

Overnight, the Dow rose +8.25 points or +0.07% higher to close at 11,985.44. Today the FBM KLCI is likely to trade within a range of 1487 to 1546.

This week's expected range: 1508 – 1605
Today’s expected range: 1487 – 1546

Resistance: 1529, 1537, 1546
Support: 1487, 1496, 1508

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Thursday, January 27, 2011

FBM KLCI - down for the sixth consecutive days

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