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Friday, October 15, 2010

FBM KLCI - marginally lower on profit-taking

Stocks on Bursa Malaysia ended lower yesterday with the benchmark index giving up its earlier gains on profit-taking activities. Continued buying of key plantation stocks helped the index break the 1,500-points psychological barrier earlier in the day. Speculation of potential budget goodies coupled with positive sentiment in the US and regional markets prompted buying interest in the local market. The FBM KLCI fell a marginal 0.59 point or 0.04% lower at 1496.38, off its intra-day high of 1503.82 after opening 3.87 points higher at 1500.84. Losers led gainers by 455 to 348 while 302 counters were unchanged. Turnover rose to 1.274 billion shares worth RM2.041 billion, from Wednesday’s 1.119 billion shares valued at RM2.03 billion.

The FBM KLCI opened with an up gap of 3.87 points at 1500.84 and surged to the intra-day high of 1503.82 within the first five minutes, profit-taking activities immediately set in which sent the key index to its intra-day low of 1490.57 before the last hour bargain hunting activities which lifted the key index to close just 0.59 point lower at 1496.38. Chart-wise, the FBM KLCI formed a bearish dark-cloud-cover candlestick which is a top reversal pattern, and the key index is likely to further correct downward, and remain volatile around the 1500-points level before it can stay firm above it, as many investors will take opportunity to sell into strength when the key index reach this historical height level.

MACD continued to move higher, and has just crossed its signal-line to make a “golden- cross”, as shown by the histogram which is above the zero-line now. This indicates the momentum has again tuned positive and likely to continue moving upward. RSI (14) at 74.7 has, however, hooked down reflecting the correction to the key index, nevertheless, it is still remained in the very bullish zone. Stochastic at 90.4 has hooked downward and just crossed below its slow stochastic indicating a consolidation.

The underlying trend of the FBM KLCI continued to remain bullish, as it is still above all its short, medium and long term moving averages. Immediate support zone for the key index now lies at 1490 to 1481 provided by the 5 and 10-day moving averages, while its overhead resistance zone remained at 1500 to 1524.

The market is expected to remain active before the Budget 2011 announcement at 4.00 pm today. Overnight, the Dow fell -1.51 points or -0.01% lower to close at 11,094.57. Today, the FBM KLCI is likely to trade within a range of 1476 to 1517.

This week's expected range: 1445 – 1520
Today’s expected range: 1476 – 1517

Resistance: 1503, 1510, 1517
Support: 1476, 1483, 1490

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