Millionaire Trend Trader: FBM KLCI - pullback on profit-taking

Thursday, May 24, 2012

FBM KLCI - pullback on profit-taking

Stocks on Bursa Malaysia ended softer yesterday after a two-day rally, tracking the easier overnight performance on Wall Street and other regional markets. The FBM KLCI closed 7.13 points or 0.46% lower at 1,539.71, weighed down by losses in blue chips and heavyweights, after hovering between 1,535.11 and 1,548.11 throughout the day. Losers led gainers by 437 to 243 while 315 counters were unchanged. Turnover appreciated to 960.848 million shares worth RM1.288 billion from the 911.80 million shares valued at RM1.280 billion transacted on Tuesday.

The FBM KLCI opened 0.28 of a point higher at 1,547.12 and surged to the intra-day high of 1,548.65 within the first five minutes of trading, and heavy profit-taking that appeared pressed the benchmark index to the intra-day low of 1,535.11. The FBM KLCI then rebounded and moved sideways till closing. Chart-wise, the FBM KLCI formed a bearish engulfing candlestick pattern which indicates heavy selling pressure due to profit-taking after two days of rally. The key index is hence likely to continue its correction and consolidation today with an immediate support zone at 1,531 to 1,526, while the overhead resistance zone is at 1,548 to 1,558.

MACD slip lower, but its histogram did not follow suit, indicating a slow down in the bearish downward momentum or consolidation. RSI (14) hooked downward to 35.8 from 38.4 a day ago, reflecting the pullback, and the short term relative strength is still in the bearish zone. Stochastic oscillator was higher at 23.6 from 19.9 previously, indicating an improvement in the market strength and a continuation in the short term up cycle. Readings from the indicators showed that the FBM KLCI is currently still in a bearish and weak condition and the consolidation process may continue with a downward bias.

The trend of the FBM KLCI remained down as the key index continue to stay below the short, medium and long term moving averages, and also within the lower part of the downtrend channel. Judging from the overall technical picture, the FBM KLCI is likely to stay sideways range-bound with a downward bias. The total volume which continues to stay below the one billion shares mark indicates a lack of interest, and the consolidation may prolong.

Overnight, the Dow fell a marginal -6.66 points or -0.05% to close at 12,496.15. Today, the FBM KLCI is likely to trade within a range of 1,520 to 1,563.

This week's expected range: 1489 – 1606
Today’s expected range: 1520 – 1563

Resistance: 1548, 1555, 1563
Support: 1520, 1527, 1533

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Thursday, May 24, 2012

FBM KLCI - pullback on profit-taking

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