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

Friday, April 22, 2011

FBM KLCI - down on profit-taking

Stocks on Bursa Malaysia closed mixed yesterday on mild foreign selling prompted by weak external economic indicators which stoked investors' worries over a possible economic slowdown. The FBM KLCI ended below the 1,530 level at 1,526.33, down 4.69 points or 0.31%, after opening 2.18 points higher at 1,533.20. Gainers led losers by 452 to 354 while 285 counters were unchanged. Turnover increased to 1.373 billion shares, valued at RM1.536 billion, from 1.271 billion shares worth RM1.810 billion registered on Wednesday.

The FBM KLCI opened with an up gap of 2.18 points and surged to the intra-day high of 1,535.09 within the first fifteen minutes. Profit-taking activities which appeared immediately pressed the key index down into the negative territory and ended at the day’s low of 1,526.33. Chart-wise, the FBM KLCI formed a dark-cloud-cover candlestick pattern which is a reversal pattern and indicates heavy profit-taking after a strong rise the day before. Following this price action, the FBM KLCI is likely to further consolidate itself.

MACD continued to slide lower while the histogram is almost flat, indicating a continued loss in the momentum. RSI (14) has again hooked downward to 48.6 and is back to the bearish bias neutral zone. Stochastic is flat at 22.7 and had just crossed-over its slow stochastic line, indicating weak market strength. Readings from the indicators showed a relatively weak condition of the FBM KLCI, and hence, the key index is likely to further consolidate itself.

The short term trend of the FBM KLCI is now sideways, as the key index is closing above the 5-day moving average (MA) but is below the 10 and 20-day MA. The medium term trend as indicated by the 60-day MA which is flat remained sideways, while the long term uptrend is still intact. Immediate overhead resistance zone is at 1,535 to 1,541, while the immediate downside support zone is at 1,525 to 1,517.

Overnight, the Dow rose another +52.45 points or +0.42% to close at 12,505.99. Today, the FBM KLCI is likely to trade within a range of 1,514 to 1,544.

This week's expected range: 1464 – 1576
Today’s expected range: 1514 – 1544

Resistance: 1533, 1538, 1544
Support: 1514, 1520, 1523

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Friday, April 22, 2011

FBM KLCI - down on profit-taking

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