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

Wednesday, June 27, 2012

FBM KLCI - lower on profit-taking

Stocks on Bursa Malaysia ended broadly lower yesterday in line with the weaker regional sentiment, weighed down by the Eurozone debt crisis that has struck global risk appetite, leaving most equity markets weaker. The benchmark FBM KLCI stood at 1,594.1, down 9.02 points or 0.56% after opening 0.74 of a point lower at 1,602.38. Losers outnumbered gainers by 472 to 274 while 327 counters closed unchanged. Turnover dwindled to 1.047 billion shares worth RM1.479 billion from 1.072 billion shares worth RM1.250 billion on Monday.

Taking cue from the weak performance of Wall Street overnight, the FBM KLCI opened 0.74 point lower at 1,602.38 and rebounded to the intra-day high of 1,603.67 in early morning trade before profit-taking pressure sent it lower for the rest of the day hitting an intra-day low of 1,593.80 before rebounding slightly to close off low. Chart-wise, the FBM KLCI formed a bearish black candlestick which confirmed the top reversal candle signal formed on Monday, and the benchmark index is likely to further consolidate itself today. Immediate downside support zone is at 1,591 to 1,581 provided by the 10 and 20-day SMA while the overhead resistance zone is at 1,603 to 1,611.

MACD has hooked downward but is still above its signal-line, and its histogram has turned shorter indicating a reduction and possibly an initial change in the momentum direction. RSI (14) has slipped lower to 58, indicating a change in the short term relative strength from bullish to mildly bullish. Stochastic was lower at 78.3 from 87.2, indicating the market strength is turning weaker and the short term down cycle has started. Readings from the indicators showed that the FBM KLCI has entered a short term consolidation mode but the underlying tone is still bullish.

With the FBM KLCI closing below the 5-day SMA, the short term correction has started, but the overall trend still remained up. The downtrend yesterday is viewed as just a normal correction in a longer term uptrend, and when the correction is over, the FBM KLCI is likely to stage a re-test of the historical peak. Overall volume has again shrink to one billion shares level, reflecting the correction mode but it is likely to pickup again in conjunction with the listing of Felda Global Ventures Holdings Bhd, scheduled for tomorrow, June 28.

Overnight, the Dow rebounded +32.01 points or +0.26% to close at 12,534.67. Today, the FBM KLCI is likely to trade within a range of 1,580 to 1,614.

This week's expected range: 1559 – 1636
Today’s expected range: 1580 – 1614

Resistance: 1601, 1607, 1614
Support: 1580, 1587, 1590

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Wednesday, June 27, 2012

FBM KLCI - lower on profit-taking

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