Millionaire Trend Trader: FBM KLCI - continued moving southward

Wednesday, April 13, 2011

FBM KLCI - continued moving southward

Stocks on Bursa Malaysia ended lower yesterday, dragged down by weak sentiment in regional markets. The FBM KLCI fell 18.08 points to 1,525.92, after opening 4.54 points lower at 1,539.46. Decliners thumped advancers by 682 to 166 while 243 counters ended flat. Total market turnover decreased to 1.088 billion shares worth RM1.528 billion from 1.470 billion shares valued at RM2.179 billion on Monday.

The FBM KLCI opened with a down gap of 4.54 points at 1,539.46 and slid lower throughout the day to hit the intra-day low of 1,522.15, losing 21.85 points at its worst, before last minute buying of selected blue-chips lifted the key index to close off low at 1,525.92. Chart-wise, the FBM KLCI formed another long black candlestick which indicates heavy selling pressure on index-linked stocks. The key index has broken its critical support at 1,529 which happen to be the 38.2% Fibonacci retracement (FR) level, and hence may continue to slide lower to test the support of 50% FR level at 1,519. The support zone at 1,521 to 1,517 is critical, as it is made up of the 30 and 120-day moving averages, if this support zone is penetrated the FBM KLCI is likely to slide lower to the 61.8% FR level at 1,508.

MACD continued to slide lower indicating a continuous loss of momentum. Nonetheless, the MACD line is still above its signal line. RSI (14) has fell lower to 47.8, indicating the FBM KLCI has turned bearish for the short term. Stochastic plunged lower to 61.3, indicating a continuation of the down cycle and the picking up of downward momentum. Readings from the indicators showed a bearish picture of the FBM KLCI, and hence it is likely to further correct downward.

The short term trend of the FBM KLCI has turned southward, while the medium term trend remained sideways, and the long term trend, however, is still up. Immediate critical support zone is at 1,521 to 1,517 provided by the 30 and 120-day MAs, while the overhead resistance zone is at 1,530 to 1,540.

Overnight, the Dow fell -117.53 points or -0.95% to close at 12,263.58. Today, the FBM KLCI is likely to trade within a range of 1,501 to 1,557.

This week's expected range: 1500 – 1581
Today’s expected range: 1501 – 1557

Resistance: 1537, 1547, 1557
Support: 1501, 1511, 1518

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Wednesday, April 13, 2011

FBM KLCI - continued moving southward

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