Millionaire Trend Trader: FBM KLCI - in consolidation mode

Wednesday, March 21, 2012

FBM KLCI - in consolidation mode

Stocks on Bursa Malaysia closed mixed yesterday amidst cautious trading on Asian markets. The benchmark FBM KLCI rose 4.02 points or 0.26% to close at 1,577.62, after opening 1.62 points higher at 1,575.22. Losers led gainers by 431 to 314 while 376 counters were unchanged. Turnover increased to 2.14 billion shares worth RM1.76 billion from the 1.8 billion shares worth RM1.51 billion on Monday.

The FBM KLCI opened 1.62 points higher at 1,575.22 and surged to the intra-day high of 1,579.88 within the first fifteen minutes of trading. Profit-taking activity then surfaced and pressed the benchmark index lower to hit the intra-day low of 1,573.81 before a last minute buying of selected blue-chips lifted it to close in the positive territory. Chart-wise, the FBM KLCI formed a white spinning-top candlestick which indicates consolidation and indecision of market direction. With the formation of this candle pattern, the FBM KLCI is likely to continue its current sideways range-bound trend with immediate overhead resistance at 1,584 and a downside support level at 1,570.

MACD continued to slide lower and is tapering off while its histogram has turned slightly shorter upward, indicating consolidation but the downward momentum has slow down. RSI (14) continued to improve to 58.2 and indicating the short term relative strength is still in the mildly bullish state. Stochastic, however, slid lower and has crossed below the slow stochastic line, indicating a continuation of the short term down cycle and consolidation. Readings from the indicators showed that the FBM KLCI is still in a consolidation mode and this may prolong until a clear breakout sign is observed.

The short term trend of the FBM KLCI is currently sideways range-bound. Nevertheless, the medium and longer term uptrend is still intact. An important support level to watch is the 1,567-point level provided the 30-day SMA. A break below this level will likely see the FBM KLCI turning bearish for the short term. The broad market is likely to remain in cautious trading today with penny stocks dominating the active scene.

Overnight, the Dow fell -68.94 points or -0.52% to close at 13,170.19. Today, the FBM KLCI is likely to trade within a range of 1,568 to 1,586.

This week's expected range: 1541 – 1605
Today’s expected range: 1568 – 1586

Resistance: 1581, 1584, 1586
Support: 1568, 1571, 1574

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Wednesday, March 21, 2012

FBM KLCI - in consolidation mode

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