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Thursday, November 4, 2010

FBM KLCI - range-bound consolidation

Stocks on Bursa Malaysia remained in positive territory at the close yesterday, with the benchmark index up 0.07% on persistent buying interest from local institutions in selected lower-liners, plantation and consumer counters. Investors continued to snap up plantation stocks as they were bullish about the earnings of plantation companies following the higher crude palm oil prices. The FBM KLCI rose 1.03 points to close at 1507.60 after opening 0.82 point higher at 1507.39. Gainers led losers by 503 to 280 while 307 counters were unchanged. Turnover increased to 1.325 billion shares worth RM1.436 billion from Tuesday’s 1.200 billion shares worth RM1.609 billion.

The FBM KLCI opened 0.82 of a point higher at 1507.39 and surged to the intra-day high of 1509.65 within the first fifteen minute after opening. Profit-taking activities immediate took over and sent the benchmark index to its intra-day low of 1596.60. The key index traded in the positive territory but in a narrow range throughout the day, which was really a range-bound trading day. Chart-wise, the FBM KLCI formed a Doji candlestick in Harami position which indicates consolidation and indecision of the market in its direction. Hence, the market is expected to continue its consolidation until some clearer signals surface to either push it higher or lower.

MACD continued to slide lower albeit in a slow pace, indicates the continued loss of market momentum, nevertheless, it is still above its signal line which indicates a bull market consolidation. RSI (14) at 70.6 has hooked up marginally, reflecting the marginal gain in the key index. Nonetheless, the RSI reading shows that the key index is still in the bullish zone. Stochastic at 90.5 has turned downward, but is still above its slow stochastic line, reflecting the consolidation but the underlying short term market strength remained strong. Mixed signals from the indicators indicate that the FBM KLCI might continue its range-bound consolidation.

The underlying trend remained up as the key index continues to stay above all its moving averages. Immediate overhead resistance zone remained at 1511 to 1524 while its support zone is at 1500 to 1490. Overnight, the Dow rose +26.41 points or +0.24% higher to close at 11,215.13. Today, the FBM KLCI is likely to trade within a range of 1503 to 1513.

This week's expected range: 1481 – 1524
Today’s expected range: 1503 – 1513

Resistance: 1509, 1511, 1513
Support: 1503, 1504, 1506

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