Millionaire Trend Trader: FBM KLCI - lower on pullback correction

Thursday, March 29, 2012

FBM KLCI - lower on pullback correction

Stocks on Bursa Malaysia closed lower yesterday in tandem with losses in global markets. The benchmark FBM KLCI declined 4.35 points or 0.27% to 1,583.75. Decliners beat advancers by 491 to 244 while 350 counters were unchanged. Turnover was lower at 1.562 billion shares worth RM1.305 billion from 1.944 billion shares worth RM1.663 billion on Tuesday.

The FBM KLCI opened 0.06 of a point higher at 1,588.16 and traded to the intra-day high of 1,589.50 in early morning trade. Selling pressure on profit-taking activity pressed the key index to the intra-day low of 1,582.80 before rebounding slightly to close off low. Chart-wise, the FBM KLCI formed a bearish black candlestick which indicates the bears were in control and a pullback correction, and the key index is likely to continue falling further. The FBM KLCI has closed below the 5-day SMA yesterday, and it is likely to slide lower to the next lower support level at 1,580 provided by the 10 and 20-day SMAs, and a break below the 1,580-point level is likely to see the key index falling lower towards the 30-day SMA support at 1,572.

MACD has curved downward, and the histogram also turned longer downward, indicating an increase in the bearish momentum. RSI (14) hooked downward to 58.9, reflecting the pullback correction and the short term relative strength has turned weaker to mildly bullish from bullish previously. Stochastic hooked downward to 81.2 from 84.9 previously, reflecting the pullback and indicating a possible end of the short term up cycle. Readings from the indicators showed that weakness is again surfacing and the FBM KLCI might go into a consolidation mode.

The overall uptrend of the FBM KLCI remained intact. Nevertheless, the key index has closed below the 5-day SMA yesterday, indicating the beginning of a possible short term correction. An important support level to watch is the 1,572-point level provided by the 30-day SMA, a close below this level is likely to see the FBM KLCI turning bearish for the short term. Overnight, the Dow fell -71.52 points or -0.54% to close at 13,126.21. Today, the FBM KLCI is likely to trade within a range of 1,574 to 1,597.

This week's expected range: 1559 – 1604
Today’s expected range: 1574 – 1597

Resistance: 1588, 1592, 1597
Support: 1574, 1578, 1581

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Thursday, March 29, 2012

FBM KLCI - lower on pullback correction

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