Millionaire Trend Trader: FBM KLCI - in sideways consolidation mode

Friday, April 20, 2012

FBM KLCI - in sideways consolidation mode

Stocks on Bursa Malaysia closed lower yesterday as investors tracked losses in regional markets as cautious sentiment prevailed amid lingering concerns over the Euro-zone debt crisis. The FBM KLCI ended 2.24 points easier at 1,596.62 after opening 0.23 points higher at 1,599.09. Losers outpaced gainers 429 to 281 while 350 counters were unchanged. Turnover decreased to 1.708 billion shares, worth RM1.555 billion, from 2.134 billion shares, worth RM1.615 billion, registered on Wednesday.

The FBM KLCI opened 0.23 point higher at 1,599.09 and surged to the intra-day high of 1,602.12 within the first five minutes of trading. The key index then slid lower on profit-taking activity to hit the intra-day low of 1,595.54 before rebounding slightly to close off low. Chart-wise, the FBM KLCI formed a bearish black inverted-hammer like candlestick which indicates the bears were in control. With the price action dominated by selling yesterday, the FBM KLCI is likely to continue to consolidate and move range-bound today with a downward bias. Immediate downside support zone is at 1,594 to 1,587 provided by the 20 and 30-day SMA.

MACD and its histogram continued to slide lower, indicating a continued loss in the index’s short term momentum. RSI (14) hooked down to 56, indicating the short term relative strength has again weakened but is still in the mildly bullish zone. Stochastic oscillator also slid lower to 53.1, indicating a continued loss in the index’s strength and a continuation of the short term down cycle. Readings from the indicators showed that the FBM KLCI is losing its momentum and the consolidation process is likely to extend.

The short term trend of the FBM KLCI has turned sideways while the medium and longer term trend still remained up. The FBM KLCI is likely to continue with its sideways range-bound trend with an immediate overhead resistance zone at 1,602 to 1,605 while the downside support zone is at 1,594 to 1,587. With the volume staying at 1.7 billion shares, the overall market is still going to be dominated by rotational play on penny stocks with the index linked counters continued to consolidate.

Overnight, the Dow fell -68.65 points or -0.53% to close at 12,964.10. Today, the FBM KLCI is likely to trade within a range of 1,587 to 1,609.

This week's expected range: 1574 – 1623
Today’s expected range: 1587 – 1609

Resistance: 1601, 1605, 1609
Support: 1587, 1591, 1594

Stocks to watch: OLDTOWN, CANONE, DELEUM

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Friday, April 20, 2012

FBM KLCI - in sideways consolidation mode

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