Millionaire Trend Trader: FBM KLCI - higher in directionless trading

Tuesday, March 20, 2012

FBM KLCI - higher in directionless trading

Stocks on Bursa Malaysia closed on a mixed note yesterday amidst cautious trading in a directionless range-bound pattern. The benchmark FBM KLCI rose by 2.2 points or 0.14% to close at 1,573.6, after opening 2.9 points higher at 1,574.3. Losers led gainers by 434 to 319 while 329 counters were unchanged. Turnover fell to 1.8 billion shares worth RM1.51 billion from 2.414 billion shares worth RM1.926 billion on last Friday.

The FBM KLCI opened 2.9 points higher at 1,574.30 and moved to the intra-day high of 1,578.51 within the first twenty minutes of trade, and profit-taking activity which surfaced sent the benchmark index to the intra-day low of 1,570.88. It then rebounded and moved in a sideways range-bound mode till closing. Chart-wise, the FBM KLCI formed a small black spinning-top in Harami position, which indicates indecision of the market direction with a downward bias, as a black spinning-top candlestick indicated that the sellers were slightly dominant. Hence, the FBM KLCI is likely to continue its consolidation process today.

MACD continued to slide lower, indicating a continued loss in the momentum. RSI (14) hooked up slightly to 56, reflecting a weak rebound, and the short term relative strength was back to the mildly bullish zone. Stochastic has hooked down to 50.8, indicating a loss in the rebound strength and the short term market cycle may continue its downward trend. Readings from the indicators showed that the FBM KLCI is still in a consolidation process and may prolong as the market momentum continues to stay weak.

The short term trend of the FBM KLCI is currently sideways range-bound, while the medium and longer term trend is still up. Immediate overhead resistance zone is at 1,578 to 1,583 while the immediate downside support zone is at 1,570 to 1,562 with 1,567 being a critical support provided by the 30-day SMA. With volume again back to the 1.8 billion shares level, some rotational play on the penny stocks is likely to be seen while the index-link counters may continue to consolidate.

Overnight, the Dow rose +6.51 points or +0.05% to close at 13,239.13. Today, the FBM KLCI is likely to trade within a range of 1,562 to 1,587.

This week's expected range: 1541 – 1605
Today’s expected range: 1562 – 1587

Resistance: 1578, 1582, 1587
Support: 1562, 1566, 1570

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Tuesday, March 20, 2012

FBM KLCI - higher in directionless trading

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