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

Tuesday, March 8, 2011

FBM KLCI - pullback on profit-taking

Stocks on Bursa Malaysia ended lower yesterday as trading remained uninspiring with the ongoing conflict in oil-rich Libya continuing to rattle investors. The fall was also in line with regional markets and the weaker close on Wall Street last Friday. The FBM KLCI went down 6.87 points or 0.45% to close at 1,515.74 after opening 1.27 points lower at 1,521.34. Losers outpaced gainers by 583 to 185, while 243 counters were unchanged. Turnover decreased to 714.797 million shares worth RM1.097 billion from 1.13 billion shares worth RM1.9 billion last Friday.

The FBM KLCI opened 1.27 points lower at 1,521.34, and slid lower throughout the day to touch the intra-day low of 1,511.27 before a last minute buying of selected key heavyweights pushed the key index to close off low at 1,515.74. Chart-wise, the FBM KLCI formed a bearish black candlestick which confirmed the reversal signal issued by the shooting-star candlestick formed on Friday. The price action yesterday has covered the up gap formed on Friday and has brought the key index back below the neckline of the head-and-shoulder pattern, and hence the key index is likely to slide lower.

MACD has continued to move higher, but is still below the zero line, signifying the recent up move could be just a technical rebound. RSI (14) has hooked downward to 50.3, the neutral zone. Stochastic has continued to move higher to 75, indicating the short term upward strength is still intact. Mixed signals from the indicators showed that the FBM KLCI is currently in a rebound mode and is likely to further consolidate.

The short term trend of the FBM KLCI has turned up, however, this could well be just a technical rebound as the price action yesterday shows that there was no follow through buying after a strong up move but actually corrected. The medium term trend as indicated by the 60-day MA has turned sideways, whilst the long term trend is still up. Immediate overhead resistance zone is at 1,520 to 1,528, while the immediate downside support zone is at 1,510 to 1,500.

Overnight, the Dow fell -79.85 points or -0.66% to close at 12,090.03. Today, the FBM KLCI is likely to trade within a range of 1,500 to 1,531.

This week's expected range: 1453 – 1584
Today’s expected range: 1500 – 1531

Resistance: 1521, 1527, 1531
Support: 1500, 1506, 1510

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Tuesday, March 8, 2011

FBM KLCI - pullback on profit-taking

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