Millionaire Trend Trader: FBM KLCI - medium term trend turned bearish

Monday, April 30, 2012

FBM KLCI - medium term trend turned bearish

Stocks on Bursa Malaysia closed lower last Friday on lack of investor support, as investors were reluctant to hold new positions amid weaknesses in regional markets and before the Bersih 3.0 rally over the weekend. News on Spain's credit rating downgrade had overshadowed the good performance on Wall Street and better US corporate earnings. Standard & Poor's Ratings Services lowered its investment-grade rating on Spain by two notches to 'BBB+' from 'A', citing mounting risks to the nation's government debt as the economy contracts. The benchmark FBM KLCI lost 11.89 points 0.75% to settle at 1,567.80 after opening 0.49 point higher at 1,580.18, and on a weekly basis, it lost 24.05 points from 1,591.85 last Friday. Losers outpaced gainers by 409 to 286 while 349 counters were flat. Turnover fell to 1.296 billion shares worth RM1.386 billion compared with Thursday’s 1.454 billion shares valued at RM1.461 billion, and total weekly volume decreased to 7.309 billion shares valued at RM7.520 billion from previous week’s 8.602 billion shares, valued at RM7.534 billion.

The FBM KLCI was basically in correction mode the whole of last week. It opened 0.02 of a point higher at 1,591.87 and surged to the intra-week high of 1,592.45 rights after opening, but slid under selling pressure to close 8.05 points lower at 1,583.80 on Monday. The FBM KLCI ended 1.52 points lower at 1,582.28 on Tuesday after opening 3.23 points lower at 1,580.57. On Wednesday, the benchmark index continued to move southward to end another 2.93 points lower at 1,579.35. The FBM KLCI staged a mild rebound on Thursday to close marginally higher at 1,579.69 with a marginal gain of 0.34 point in cautious trading and taking cue from gains on regional markets, and Friday saw another sell down with the benchmark index losing 11.89 points to end the week at 1,567.80.

On the weekly chart, the FBM KLCI formed a bearish long black candlestick which indicates the benchmark index was facing heavy selling pressure last week as it opened near the week’s high and closed near the week’s low. Moreover, the key index has closed below the 10-week SMA, and with selling pressure mounting, the FBM KLCI is likely to further correct downward towards the 20-week SMA support at 1,553-point this week. On the daily chart, the FBM KLCI also formed a bearish long black candlestick which reflected the bearish mood on last Friday, and the FBM KLCI is likely to slide lower to test the next lower support level at 1,550-point if it continues to break the immediate support of 1,566-point.

Weekly MACD and its histogram continued to slide lower, indicating a continued loss in the weekly momentum. Daily MACD also slid lower and has crossed below the zero-line, spelling the end of the bull trend and the beginning of a bear trend. Weekly RSI (14) plunged lower to 55.9 from previous week’s 63.4, indicating a continued weakening of the index’s weekly relative strength. Daily RSI (14) also slipped lower to 35.2, indicating the FBM KLCI has turned bearish from the short term perspective. Weekly Stochastic has crossed below the 80-level to 78.3, indicating the end of the weekly up cycle and the beginning of a weekly down cycle. Daily Stochastic continued to slide lower to 4.3, indicating the index’s short term strength is very weak. Nevertheless, as the stochastic has reached a deeply short term oversold situation, some technical rebound might be expected. Readings from both the weekly and daily indicators showed that the FBM KLCI is current very weak and bearish, and the downtrend may continue for a while until a solid reversal is seen.

The short trend of the FBM KLCI remained down, whilst the medium term has now turned bearish as the key index has closed below the lower support trend-line of the uptrend channel as well as below the 60-day SMA, which means the uptrend that started on 26^th September 2011 is officially over, and any rebound from now should be viewed as an opportunity to sell, especially on the index-linked blue-chips. For the coming week, the FBM KLCI is likely to further correct downward with a critical downside support at the 1,540-point level, being the 23.6% Fibonacci retracement level for the range from the pivot low of 1,310.53 on 26^th September 2011 to the pivot high of 1,609.33 registered on 3^rd April 2012.

Last Friday, the Dow rose +23.69 points or +0.18% to close at 13,228.31. This week, the FBM KLCI is likely to trade within a range of 1,532 to 1,618, and for today, it is likely to trade within a range of 1,549 to 1,594.

This week's expected range: 1532 – 1618
Today’s expected range: 1549 – 1594

Resistance: 1577, 1586, 1594
Support: 1549, 1557, 1562

No comments:

Post a Comment

What's happening now is that the market remains trading at very thin volumes and that can affect prices, even when just a handful of shares are traded. The decision of any fund to pull out from certain stock hits the price. - Carlos Slim

You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets. - Peter Lynch

Vision is perhaps our greatest strength.. it has kept us alive to the power and continuity of thought through the centuries, it makes us peer into the future and lends shape to the unknown.
- Li Ka Shing

Great investment opportunities come around when excellent companies are surrounded by unusual circumstances that cause the stock to be misappraised. - Warren Buffet

Learning is a never ending journey in the stock market. The very moment you think you have learned enough, you'll fall. - Harrison Ho

When people are frightened, they cut their time horizon dramatically, even advisors will say to sell because they see portfolios crumble and they fear people will have nothing left. It's really not rational, but it does happen. - David Dreman

I've found that when the market's going down and you buy funds wisely, at some point in the future you will be happy. You won't get there by reading 'Now is the time to buy.' - Peter Lynch

A military operation involves deception. Even though you are competent, appear to be incompetent. Though effective, appear to be ineffective. - Sun-tzu

Financial markets are supposed to swing like a pendulum: They may fluctuate wildly in response to exogenous shocks, but eventually they are supposed to come to rest at an equilibrium point. - George Soros

If you don't change, reality in the end forces that change upon you. - Stuart Wilde

The investor of today does not profit from yesterday's growth. - Warren Buffet

Analysts have always been overly optimistic.
- David Dreman

We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don't let yourself be lulled into inaction. - Bill Gates

A corporation's primary goal is to make money. Government's primary role is to take a big chunk of that money and give it to others. - Larry Ellison

If you believe that some day it's going to happen, some day it probably will happen. You just have to make sure you're there when it's happening, and ideally you're at the front of the parade, and the principle beneficiary of when it happens, but it's not a kind of thing where you just sort of sit back and wait. - Steve Case

I try to learn from the past, but I plan for the future by focusing exclusively on the present. That's where the fun is. - Donald Trump

The more flexible an economy, the greater its ability to self-correct in response to inevitable, often unanticipated, disturbances and thus to contain the size and consequences of cyclical imbalances. - Alan Greenspan

The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow. - Rupert Murdoch

The price pattern reminds you that every movement of importance is but a repetition of similar price movements, that just as soon as you can familiarize yourself with the actions of the past, you will be able to anticipate and act correctly and profitably upon forthcoming movements. - Jesse Livermore

In the business world, the rearview mirror is always clearer than the windshield. - Warren Buffett

Be extremely subtle, even to the point of formlessness. Be extremely mysterious, even to the point of soundlessness. Thereby you can be the director of the opponent's fate. - Sun-tzu

Look at market fluctuations as your friend rather than your enemy.. profit from folly rather than participate in it. - Warren Buffett

I hate weekends because there is no stock market. - Rene Rivkin

Before this century is over, the Dow Jones Industrial Average will probably be over one million versus around 10,000 now. So for the long-term, the outlook is tremendously bullish if you buy stocks blindly to keep for a century. - John Templeton

A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well. - Jeff Bezos

Making good decisions is a crucial skill at every level. - Peter Drucker

We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful. - Warren Buffett

The individual investor should act consistently as an investor and not as a speculator. This means.. that he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning that satisfies him that he is getting more than his money's worth for his purchase. - Benjamin Graham

In this business if you're good, you're right six times out of ten. You're never going to be right nine times out of ten. - Peter Lynch

The financial markets generally are unpredictable. So that one has to have different scenarios.. The idea that you can actually predict what's going to happen contradicts my way of looking at the market. - George Soros

Our favourite holding period is forever. - Warren Buffet

If you buy all the stocks selling at or below two times earnings, you will lose money on half of them because instead of making profits they will actually lose money, but you will only lose a dollar or so a share at most. Then others will be mediocre performers. But the remaining big winners will go up and produce fabulous results and also ensure a good overall result. - John Templeton

When I'm bearish and I sell a stock, each sale must be at a lower level than the previous sale. When I am buying, the reverse is true. I must buy on a rising scale. I don't buy long stocks on a scale down, I buy on a scale up. - Jesse Livermore

I've learned that mistakes can often be as good a teacher as success. - Jack Welch

Well, you know, I was a human being before I became a businessman. - George Soros

Checking the results of a decision against its expectations shows executives what their strengths are, where they need to improve, and where they lack knowledge or information. - Peter Drucker

The market does not beat them. They beat themselves, because though they have brains they cannot sit tight. - Jesse Livermore

Wide diversification is only required when investors do not understand what they are doing. - Warren Buffett

Stock market bubbles don't grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception. - George Soros

Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble... to give way to hope, fear and greed. - Benjamin Graham

The price pattern reminds you that every movement of importance is but a repetition of similar price movements, that just as soon as you can familiarize yourself with the actions of the past, you will be able to anticipate and act correctly and profitably upon forthcoming movements. - Jesse Livermore

I think you have to learn that there's a company behind every stock, and that there's only one real reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies. - Peter Lynch

Before you can really start setting financial goals, you need to determine where you stand financially. - David Bach

The average man doesnâ€™t wish to be told that it is a bull or a bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesnâ€™t even wish to have to think. - Jesse Livermore

Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years. - Warren Buffett

Suppliers and especially manufacturers have market power because they have information about a product or a service that the customer does not and cannot have, and does not need if he can trust the brand. This explains the profitability of brands. - Peter Drucker

The key to making money in stocks is not to get scared out of them. - Peter Lynch

I never hesitate to tell a man that I am bullish or bearish. But I do not tell people to buy or sell any particular stock. In a bear market all stocks go down and in a bull market they go up. - Jesse Livermore

Millionaire Trend Trader

"T+10 interest FREE margin trading account"

Monday, April 30, 2012

FBM KLCI - medium term trend turned bearish

No comments:

:: Disclaimer ::