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Tuesday, October 26, 2010

FBM KLCI - consolidation

Stocks on Bursa Malaysia ended higher yesterday as gains in plantation counters and key heavyweights sustained the market's positive trend, and keen participation of retail investors also lifted the share prices of lower liners. However, profit taking narrowed overall gains. The benchmark FBM KLCI rose 0.80 of a point or 0.05% to 1491.44 after opening 2.89 points higher at 1493.53. Gainers led losers by 511 to 268 while 310 counters were unchanged. Turnover decreased to 1.131 billion shares worth RM1.470 billion from the1.225 billion shares worth RM1.596 billion on last Friday.

The FBM KLCI opened with an up gap of 2.89 points at 1493.53, and surged to the intra-day high of 1495.74 within the first thirty minutes of the day. Profit-taking activities immediately appeared and sent the key index to the intra-day low of 1491.25. Some late afternoon buying did lift the key index off low, nevertheless, the bear appeared at last minute and sent the key index down to close near the day’s low. Chart-wise, the FBM KLCI formed a bearish Harami candlestick which indicates sellers were more dominant. Hence, the key index is likely to continue its range-bound consolidation. Immediate overhead resistance remained at 1496 to 1503 while the immediate downside support zone is at 1480 to 1476, where 1476 is provided by the 30-day moving average (MA).

MACD continued to slide lower with its histogram growing longer into the negative zone, indicating the downward momentum is building up, albeit the MACD line is still above its zero line. RSI (14) at 64.7 has turned up slightly, reflecting the current sideways condition of the key index, and the RSI reading is still in the mildly bullish zone. Stochastic is basically flat, reflecting the current consolidation mode of the key index, and it may either move up or downward after this.

The 5-day MA is currently below the 10-day MA, indicating a downward bias for the immediate short term. Signals from the indicators are pointing toward more consolidation for the FBM KLCI with a downward bias for the short term. The medium to longer term uptrend, nonetheless, remained intact.

The overall market is expected to remain in a rotational play mode with lower liners taking the centre stage while key heavyweights consolidate. Plantation stocks are expected to continue their uptrend. Overnight, the Dow rose +31.49 points or +0.28% higher to close at 11,164.05. Today, the FBM KLCI is likely to trade within a range of 1485 to 1502.

This week's expected range: 1459 – 1516
Today’s expected range: 1485 – 1502

Resistance: 1494, 1497, 1502
Support: 1485, 1488, 1490


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