Millionaire Trend Trader: FBM KLCI - short term downtrend

Wednesday, January 26, 2011

FBM KLCI - short term downtrend

Stocks on Bursa Malaysia ended bearish yesterday following persistent profit-taking activities ahead of the forthcoming Chinese New Year and shorter trading period next week. Key regional markets, however, were mostly higher. The FBM KLCI ended the day 16.54 points or 1.07% lower at 1,526.43 after opening 0.26 of a point easier at 1,542.71 points. Decliners led advancers by 511 to 292 while 278 counters were unchanged. Volume increased to 1.951 billion shares, valued at RM2.439 billion, from Monday's 1.833 billion shares valued at RM2.210 billion.

The FBM KLCI opened 0.21 point lower but rebounded to touch the intra-day high of 1544.85 within the first fifteen minutes taking cue from the strong overnight performance of Wall Street. However, persistent profit-taking activities continued to press the key index lower to close the day at its lowest point of 1526.43. Chart-wise, the FBM KLCI formed a bearish long black candlestick, coupled with high volume, indicates continuous liquidation by big-players. The key index was down consecutively for the last five trading days and has retrace almost fifty percent of its up move range from the pivot low of 1474.02 on November 29, 2010 to its pivot high of 1576.05 registered on January 6, 2011. If the selling continues, the key index may slides lower towards the 61.8% retracement level at 1514 and the 78.6% level at 1496.

MACD continued to slide lower, indicating a pick up in the downward momentum. RSI (14) slid lower to 41.2, indicates the key index has turned bearish for the short term. Stochastic continued to slide lower to 22.6, is coming near the oversold zone and some rebound maybe expected soon.

The short term trend of the FBM KLCI is now down, while the medium to long term uptrend still remained intact. The key index has now breached the 30-day moving average (MA) support at 1536 and also the critical support level at 1528, and it is likely to move lower to test the 60-day MA support at 1520. The 60-day MA has been providing good support to the uptrend all this while, if it does not hold, then 1514 and 1500 will be the next lower targets.

Overnight, the Dow fell a marginal -3.33 points or -0.03% lower to close at 11,977.19. Today the FBM KLCI is likely to trade within a range of 1501 to 1563.

This week's expected range: 1508 – 1605
Today’s expected range: 1501 – 1563

Resistance: 1538, 1550, 1563
Support: 1501, 1514, 1520

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Wednesday, January 26, 2011

FBM KLCI - short term downtrend

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