Millionaire Trend Trader: FBM KLCI - lower on lackluster trade

Wednesday, May 4, 2011

FBM KLCI - lower on lackluster trade

Stocks on Bursa Malaysia closed lower yesterday amid cautious trading in regional markets. Asian markets were mixed as investors turned cautious on renewed concern about European sovereign debt and the fragile global economy, but the Nikkei Index and Shanghai Composite Index were up on speculation that US might stick to a loose monetary policy and on falling commodities prices. The FBM KLCI slipped 3.48 points or 0.23% to close at 1,531.47. Losers led gainers by 519 to 255 while 262 counters were unchanged. Turnover increased to 1.007 billion shares worth RM1.247 billion from last Friday’s 852.367 million shares worth RM1.264 billion.

The FBM KLCI opened 1.04 point higher at 1,535.99 and surged to the intra-day high of 1,537.85 within the first twenty minutes, and profit-taking activities which surfaced pressed the index to the intra-day low of 1,530.05 before rebounding to close off low at 1,531.47. Chart-wise, the FBM KLCI formed a bearish black candlestick which confirmed the reversal signal issued by the hanging-man candlestick that formed last Friday, and hence, the key index is likely to continue moving lower to further consolidate. Immediate support zone for the FBM KLCI is at 1,530 to 1,520.

MACD has turned flat and is still below its signal line, indicating the upward momentum has fizzles out after climbing upward for four consecutive days. RSI (14) has hooked downward to 51.4, indicating the key index has fallen back to the neutral zone. Stochastic is higher at 59.3, indicating the short term up cycle is still in place. Readings from the indicators showed that the momentum and strength of the FBM KLCI is waning, and is likely to continue to consolidate.

As expected, the FBM KLCI has fallen back to its consolidation zone, and the short and medium term trend remained sideways. The long term trend, however, is still up. Immediate overhead resistance zone is at 1,535 to 1,541 while the immediate downside support zone is at 1,530 to 1,520. With the dwindling volume, the FBM KLCI is likely to remain in consolidation with a downward bias.

Overnight, the Dow rose a marginal +0.15 point or +0.00% to close at 12,807.51, Today, the FBM KLCI is likely to trade within a range of 1,520 to 1,546.

This week's expected range: 1503 – 1561
Today’s expected range: 1520 – 1546

Resistance: 1537, 1541, 1546
Support: 1520, 1525, 1528

Stocks to watch: MEGB, SCIENTX, THETA

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Wednesday, May 4, 2011

FBM KLCI - lower on lackluster trade

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