Millionaire Trend Trader: FBM KLCI

Thursday, June 14, 2012

FBM KLCI - sign of toppishness

Stocks on Bursa Malaysia closed flat yesterday on the back of a lacklustre market as concerns over weak market fundamentals globally heightened, and made most investors stay on the sidelines while waiting for good news from either United States on possible additional financial stimulus or further move by European economies to help Spain. The FBM KLCI ended at its intra-day low level of 1,576.23 with a marginal gain of 0.16 of a point compared with Tuesday’s close of 1,576.07. Gainers outnumbered losers by 386 to 282 while 334 counters were unchanged. Turnover declined to 677.021 million units worth RM1.216 billion from Tuesday’s closing of 707.438 million shares valued at RM1.073 billion.

The FBM KLCI opened 0.65 of a point higher at 1,576.72 and climbed to the intra-day high of 1,580.55, and was hovering in a sideways range for most part of the day. Selling pressure which emerged towards the end of the day pressed the key index to close at the lowest point of the day. Chart-wise, the FBM KLCI formed a black inverted hammer which indicates buyers were initially strong, but succumbs to selling pressure towards the end. With this price action, the key index is likely to fall further today, and it showed that the resistance at 1,582 is a tough barrier to cross. Immediate downside support is at 1,572 to 1,568

MACD was higher but its histogram turned shorter, indicating a reduction in the upward momentum. RSI (14) was flat at 54.2, indicating the short term relative strength is still in the mildly bullish zone. Stochastic was higher at 87.2, indicating strong market strength, or short term overbought situation, and continuation of the short term up cycle. Readings from the indicators showed some early signs that the FBM KLCI is losing its upward momentum, and might stage a pullback or correction.

The FBM KLCI showed sign of congestion at the current level; however, the short term trend is up as the key index is still above the short term 5 and 10-day SMAs. The medium term trend is sideways while the long term uptrend is still intact. With the total market volume continues to shrink, the local bourse is likely to extend its consolidation. Overnight, the Dow fell -77.42 points or -0.62% to close at 12,496.38. Today, the FBM KLCI is likely to trade within a range of 1,570 to 1,585.

This week's expected range: 1532 – 1603
Today’s expected range: 1570 – 1585

Resistance: 1579, 1582, 1585
Support: 1570, 1573, 1574

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Thursday, June 14, 2012

FBM KLCI - sign of toppishness

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