Millionaire Trend Trader: FBM KLCI

Thursday, April 26, 2012

FBM KLCI - in consolidation

Stocks on Bursa Malaysia closed lower yesterday despite opening on a higher note due to weak sentiments amid the persistent worries on the global economy. The local market was mostly influenced by external factors while internal developments like the Bersih 3.0 rally, scheduled to be held this Saturday, added to the negative sentiment. The FBM KLCI ended 2.93 points or 0.19% lower at 1,579.35 after opening 0.16 of a point higher at 1,582.44. Losers outnumbered gainers by 405 to 315 while 346 counters were unchanged. Total market volume increased to 1.47 billion shares worth RM1.53 billion from Tuesday’s 1.42 billion shares worth RM1.55 billion.

The FBM KLCI opened 0.16 of a point higher at 1,582.44 and moved higher to the intra-day high of 1,585.93 within the first forty five minutes. The key index then made a turn and slid lower for the rest of the day and hit the intra-day low of 1,578.68 before rebounding marginally to close off low. Chart-wise, the FBM KLCI formed a black inverted hammer candlestick which indicates the bulls were trying to fight back initially but succumbed to the selling pressure from the bears, and the key index is likely to continue its consolidation.

MACD and its histogram continued to slide lower, indicating a continued loss in the index’s short term momentum. RSI (14) was lower at 42.5, indicating a continued loss in the short term relative strength deeper into the mildly bearish zone. Stochastic continued to slide lower into the short term oversold zone and registered a reading of 8.7. Readings from the indicators showed that the FBM KLCI is currently weak and bearish. However, as the stochastic oscillator has reached the short term oversold zone, a rebound might be expected ahead.

The short term trend of the FBM KLCI is currently down and bearish; nevertheless, the medium to longer term trend is still up. The key index is currently closing just marginally below the 50-day SMA support, and a continue break of this important medium support level will likely see heavier selling pressure which might push the FBM KLCI to a lower level. Immediate downside support zone is at 1,578 to 1,566 with 1,574, the 60-day SMA support, being a critical support level to watch, and the overhead resistance zone is at 1,586 to 1,593.

Overnight, the Dow rose +89.16 points or +0.69% to close at 13,090.72. Today, the FBM KLCI is likely to trade within a range of 1,569 to 1,593.

This week's expected range: 1577 – 1613
Today’s expected range: 1569 – 1593

Resistance: 1584, 1589, 1593
Support: 1569, 1574, 1576

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Thursday, April 26, 2012

FBM KLCI - in consolidation

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