Millionaire Trend Trader: FBM KLCI - stabilising and poised for a reversal

Friday, March 18, 2011

FBM KLCI - stabilising and poised for a reversal

Stocks on Bursa Malaysia closed lower yesterday in line with the prevailing weaknesses on regional markets, spooked by concerns over Japan’s nuclear crisis and the geopolitical tensions in Libya and Bahrain. The FBM KLCI fell 0.35 point or 0.02% to 1,492.09. Decliners outnumbered advancers by 435 to 284, with 263 counters unchanged. Turnover fell to 922.172 million shares worth RM1.467 billion from 931.424 million shares worth RM1.471 billion on Wednesday.

The FBM KLCI opened with a down gap of 9.15 points at 1,483.29 following the hefty fall on Wall Street overnight. The key index dipped to the intra-day low of 1,480.27 within the first five minutes and rebounded from there to gradually recover the losses to close almost unchanged at day’s high of 1.492.09. Chart-wise, the FBM KLCI formed a bullish white piercing-line candlestick which indicates counter-attack by the buyers to overcome sellers in picking up shares while they are in the low level. The FBM KLCI has been congesting in this region for the last four days, and with a dwindling volume it indicates selling pressure is gradually diminishing and the key index is poised for a rebound soon.

MACD continued to slide lower and is tapering off, at the same time the histogram is almost flat, indicating a slow down in the downward momentum. RSI (14) is almost flat at 41.6, and is still in the bearish zone. Stochastic is lower at 27.6, but is tapering off, indicating a slow down in the downward strength. Readings from the indicators indicated that the FBM KLCI is currently still bearish, but there are signs that the bearish force is slowing down, and hence might be poised for a reversal.

The very short term trend of the FBM KLCI has turned sideways, albeit the main trend is still down. The key index has just crossed above the short term 5-day moving average, and might continue to move higher with the appearance of short term buying. Immediate overhead resistance zone is at 1,495 to 1,510, while the immediate downside support zone is at 1,480 to 1,474.

Overnight, the Dow rose +161.29 points or +1.39% to close at 11,774.59. Today, the FBM KLCI is likely to trade within a range of 1,472 to 1,505.

This week's expected range: 1453 – 1537
Today’s expected range: 1472 – 1505

Resistance: 1496, 1500, 1505
Support: 1472, 1476, 1484

Stocks to watch: EKSONS, LINGUI, JTIASA, TAAN, WTK, MEDIAC, VITROX

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Friday, March 18, 2011

FBM KLCI - stabilising and poised for a reversal

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