Millionaire Trend Trader: FBM KLCI - lower on profit-taking

Tuesday, January 11, 2011

FBM KLCI - lower on profit-taking

Stocks on Bursa Malaysia ended mixed yesterday on profit-taking activities after five consecutive days of strong rally. A weaker key regional and US markets also encouraged investors to trim their positions. The FBM KLCI fell 8.69 points or 0.55% to 1563.52 after opening 2.43 points higher at 1574.64. Decliners led advancers by 478 to 427 while 233 were unchanged. Volume declined to 2.226 billion shares valued at RM2.800 billion from 2.536 billion shares worth RM3.454 billion last Friday.

The FBM KLCI opened 2.43 points higher at 1574.64 and hit the intra-day high of 1576.37 within the first fifteen minutes, heavy profit-taking activities then appeared and pressed the key index to the intra-day low of 1561.55, losing as much as 10.66 points at its worst. The key index rebounded weakly to close off low at 1563.52. Chart-wise, the FBM KLCI formed a bearish engulfing candlestick which confirmed the top reversal signal issued by the hanging-man candlestick formed last Friday. With the formation of a bearish engulfing candlestick, the FBM KLCI is likely to correct further downward, and the immediate strong support is expected at 1550, the psychological support level.

MACD continued to move higher but at a reduced pace, as shown by its shorter histogram which indicates a correction is in progress. RSI (14) has turned downward and is at 70.3, still in the very bullish zone. Stochastic has crossed below its slow stochastic line, which confirmed the correction.

The FBM KLCI may corrects further, and the short term 10-day moving average which is currently at 1542 will provide a good support to key index during the pull-back. Nevertheless, the underlying uptrend of the FBM KLCI is still unspoiled, and any pull-back should be viewed as an opportunity to further collect quality shares at lower price level.

The overall market is expected to remain active with rotational play continued in the second and third liners. Overnight, the Dow fell -37.31 or -0.32% lower to close at 11,637.45. Today, the FBM KLCI is likely to trade within a range of 1543 to 1591.

This week's expected range: 1485 – 1630
Today’s expected range: 1543 – 1591

Resistance: 1573, 1582, 1591
Support: 1543, 1552, 1557

Stocks to watch: MPHB, LEADER, MUHIBAH, PETRA, BJCORP, RPB, MRCB

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Tuesday, January 11, 2011

FBM KLCI - lower on profit-taking

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