Millionaire Trend Trader: FBM KLCI - higher but lack of momentum

Friday, February 18, 2011

FBM KLCI - higher but lack of momentum

Stocks on Bursa Malaysia ended mixed yesterday on light foreign selling pressure. Mild selling from foreign funds was seen in the afternoon. The key index, however, remained in positive territory helped by gains in selected finance counters such as MAYBANK and CIMB. The FBM KLCI rose by 2.26 points or 0.15% to 1,508.56 in cautious trading after opening 2.23 points higher at 1,508.53. Decliners led advancers by 536 to 292 while 282 were unchanged. Volume fell to 1.738 billion shares worth RM1.760 billion from 1.878 billion shares worth RM2.029 billion on Wednesday.

The FBM KLCI opened 2.23 points higher at 1,508.53 and climb to the intra-day high of 1,512.85 before lunch break. The key index stated to slip lower in the afternoon session when foreign funds came in, and pulled back to close at 1508.56. Chart-wise, the FBM KLCI formed a Doji candlestick which indicates indecision and hesitation of the key index to move higher. The neckline of the head-and-shoulder chart pattern continued to post as a resistance to the key index’s up move. Immediate overhead resistance zone is at 1513 to 1544, while the downside support zone is at 1490 to 1474.

MACD continued to slide lower, but is tapering off, while the histogram is turning shorter, indicating a slow down in the downward momentum. RSI (14) was higher at 40.6, but is still in the bearish zone. Stochastic at 26.5 had crossed above its slow stochastic line to climb higher, indicating a possible short term up move is in the brewing. Signals from the indicators show that the downward momentum had slowed down and the FBM KLCI is in a consolidation mode.

The short term trend of the FBM KLCI remained down, nonetheless, a first sign of possible reversal was seen with the key index closing above the very short term 5-day MA. The medium term trend has turned sideways, while the long term uptrend still remained intact. The FBM KLCI is likely to continue with its consolidation in the near term.

Overnight, the Dow rose +29.97 points or +0.24% to close at 12,318.14. Today, the FBM KLCI is likely to trade within a range of 1499 to 1520.

This week's expected range: 1450 – 1530
Today’s expected range: 1499 – 1520

Resistance: 1513, 1516, 1520
Support: 1499, 1502, 1505

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Friday, February 18, 2011

FBM KLCI - higher but lack of momentum

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