Millionaire Trend Trader: FBM KLCI - lower on profit-taking correction

Wednesday, June 13, 2012

FBM KLCI - lower on profit-taking correction

Stocks on Bursa Malaysia closed lower across the board yesterday as investors remained cautious on the back of bearish market sentiment globally. The FBM KLCI ended 2.34 points or 0.15% lower at 1,576.07 after moving between 1,572.53 and 1,576.97 throughout the trading session. Losers led gainers by 370 to 271 while 351 counters were unchanged. Turnover eased to 707.438 million shares, valued at RM1.073 billion, from Monday’s 732.912 million shares worth RM1.373 billion.

Taking cue from the weak performance of Wall Street overnight, the FBM KLCI opened 1.5 points lower at 1,576.91 and slipped lower to hit the intra-day low of 1,572.53 at late morning. The key index rebounded in the afternoon session recovering much of its lost ground to close off low. Chart-wise, the FBM KLCI formed a black hammer candlestick which indicates the appearance of buying support for the FBM KLCI, and it is likely to continue its rebound to climb higher today. Immediate overhead resistance zone is at 1,582 to 1,591 while the downside support zone is at 1,572 to 1,568.

MACD continued to move higher after crossing the zero-line yesterday, but its histogram turned slightly shorter reflecting the mild pullback in the key index. RSI (14) was marginally lower at 54.1 from 55.4 previously, reflecting the mild pullback correction but the short term relative strength is still in a mildly bullish state. Stochastic hooked downward slightly to 84.1 from 84.7, indicating the short term up cycle is still intact. Readings from the indicators showed that the FBM KLCI is undergoing a mild pullback correction at the moment but the momentum is still on the positive side, and it is likely to move higher after the correction is over.

The short term trend of the FBM KLCI remained up despite the pullback yesterday as the key index still remained above the short term moving averages as well as above the upper resistance trend line of the downtrend channel. The medium term trend is neutral or sideways as the key index is closing right below the 50 and 60-day SMAs, while the long term uptrend remained intact. The continued low volume in the region of only 700 million shares indicated a lack of interest in the market, hence, the FBM KLCI and the overall market may continues its consolidation mode but with an upward bias as indicated by some bullish signs in the indicators.

Overnight, the Dow rose +162.57 points or +1.31% to close at 12,573.80. Today, the FBM KLCI is likely to trade within a range of 1,568 to 1,582.

This week's expected range: 1532 – 1603
Today’s expected range: 1568 – 1582

Resistance: 1578, 1580, 1582
Support: 1568, 1570, 1573

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Wednesday, June 13, 2012

FBM KLCI - lower on profit-taking correction

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