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Friday, June 22, 2012

FBM KLCI - lower on profit-taking


Stocks on Bursa Malaysia closed on easier note yesterday following weak global market sentiment and profit-taking. Concerns over the poor external economic environment continued to rise after US Federal Reserve signaled weaker economic outlook and a slower drop in unemployment rate. The FBM KLCI fell by 2.96 points or 0.18% to close at 1,601.43 after opening 1.55 points higher at 1,605.94. Losers led gainers by 424 to 354 while 316 counters were unchanged. Turnover rose to 1.572 billion shares worth RM1.577 billion from 1.401 million shares worth RM1.763 billion yesterday.

The FBM KLCI opened 1.55 points higher at 1,605.94 and surged to the intra-day high of 1,607.31 within the first five minutes after opening, and profit-taking pressure which emerged pressed the key index lower for the rest of the day to hit the intra-day low of 1,599.75 before rebounding slightly to close off low. Chart-wise, the FBM KLCI formed a dark-cloud-cover candlestick pattern which did not penetrate below the mid point of the previous day’s candle, and this indicated mild profit-taking activity. It is likely that the FBM KLCI may continue to slip lower today to consolidate itself. Immediate downside support zone is at 1,599 to 1,594 while the overhead resistance zone is at 1,607 to 1,609.

MACD and its histogram continued to rise, indicating the upward momentum is still intact. RSI (14) has hooked downward to 64 from 66.1 previously, reflecting the mild profit-taking activity, and the short term relative strength is still in the bullish state. Stochastic was marginally higher at 95.9 and is tapering off, indicating a reduction in the market strength, but the short term up cycle is still intact. Readings from the indicators showed that the FBM KCLI is undergoing a mild profit-taking process and the overall upward momentum is still intact.

Despite the pullback yesterday, the overall trend of the FBM KLCI remained up as the key index is still above all the moving averages. The FBM KLCI is likely to stage a re-test of the historical high of 1,609.33 after the correction is over. With the overall volume improving, the market is likely to see more rotational play.

Overnight, the Dow fell -250.82 points or -1.96% to close at 12,573.57. Today, the FBM KLCI is likely to trade within a range of 1,590 to 1,615
 
This week's expected range: 1561 – 1614
Today’s expected range: 1590 – 1615

Resistance: 1606, 1611, 1615
Support: 1590, 1595, 1598

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