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

Tuesday, June 7, 2011

FBM KLCI - lower on profit-taking

Stocks on Bursa Malaysia finished lower yesterday as losses in plantation and finance stocks pressured the broader market. The FBM KLCI ended 7.71 points or 0.49% lower at 1,552.14 after opening 3.61 points lower at 1,556.24. Losers outpaced gainers by 454 to 261 while 316 counters were unchanged. Turnover increased to 635.332 million shares, worth RM972.527 million, compared with last Friday's 581.943 million shares valued at RM1.038 billion.

The FBM KLCI opened with a down gap of 3.61 points at 1,556.24 and traded lower in the negative territory for the rest of the day. It touched the intra-day low of 1,551.85 before rebounding slightly to close at 1,552.14. Chart-wise, the FBM KLCI formed a black candlestick which confirmed the possible reversal signal issued by the Doji candlestick formed on Friday. With the down move yesterday, the FBM KLCI has fallen below the downtrend line and is back to the consolidation triangle, and hence, the sideways consolidation process is likely to be extended.

MACD has started to turn downward, reflecting the correction of the key index yesterday. RSI (14) hooked downward to 57.5, indicating the FBM KLCI has turned mildly bullish from bullish last week. Stochastic is at 76.3 and has crossed below the slow stochastic line, indicating a possible beginning of a short term down cycle. Readings from the indicators showed that the FBM KLCI is undergoing a correction after a short rally over the last eight days.

The FBM KLCI has closed below the short term 5-day moving average (MA), and is likely to move lower to test the support of the 10-day MA at 1,548. The short term trend, nonetheless, is still up. The medium term trend remained sideways, while the long term uptrend is still intact. Immediate overhead resistance zone is at 1,556 to 1,566 while the immediate downside support zone is at 1,550 to 1,540. With the total volume traded remained low, the FBM KLCI is likely to further consolidate while the overall market is expected to remain quiet.

Overnight, the Dow fell -61.30 points or -0.50% to close at 12,089.96. Today, the FBM KLCI is likely to trade within a range of 1,545 to 1,562.

This week's expected range: 1520 – 1591
Today’s expected range: 1545 – 1562

Resistance: 1556, 1559, 1562
Support: 1545, 1548, 1550

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Tuesday, June 7, 2011

FBM KLCI - lower on profit-taking

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