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Thursday, October 28, 2010

FBM KLCI - retreated from new high on heavy profit-taking

Stocks on Bursa Malaysia ended mixed yesterday with gains seen in the finance counters amid weak performances of the overseas market, following the slump at the Hong Kong and China stock markets. The FBM KLCI closed 2.17 points or 0.14% higher at 1499.11, after briefly touching 1504.19. Decliners outnumbered advancers by 497 to 328 while 283 counters were unchanged. Turnover was lower at 1.169 billion shares worth RM1.636 billion from Tuesday’s 1.374 billion shares worth RM1.874 billion.

The FBM KLCI opened 0.74 point lower at 1496.20 but surged to the intra-day high of 1504.37 within the first half an hour after market opened. Heavy profit-taking activities immediately appeared which sent the key index down to 1496.73 before late afternoon bargain hunting activities lift the key index to close off low at 1499.11, just 0.89 points below the 1,500-point key psychological resistance level. Chart-wise, the FBM KLCI formed a shooting-star candlestick, which is a bearish top reversal signal, hence, the key index is likely to correct downward further. Immediate support zone for the key index is found at 1493 to 1478, while the overhead resistance zone is at 1500 to 1505.

MACD continued to slide lower, however, its histogram continued to turned shorter upward, indicating a slow down in the bearish downward momentum, and the building up of positive momentum. RSI (14) continued to climb higher into the bullish zone and is now at 68.7. Stochastic is at 70.5, and has started to move higher, indicating the beginning of an up cycle. Signals from the indicators are signaling a bullish outlook for the FBM KLCI in the short term.

The underlying uptrend of the FBM KLCI remained intact, and as the FBM KLCI has made an attempt in testing the 1500-point level, it is expected to continue testing the level in the near term. Overnight, the Dow fell -43.18 points or -0.39% lower to close at 11,126.28. Today, the FBM KLCI is likely to trade within a range of 1487 to 1513.

This week's expected range: 1459 – 1516
Today’s expected range: 1487 – 1513

Resistance: 1504, 1508, 1513
Support: 1487, 1491, 1495


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