Millionaire Trend Trader: FBM KLCI

Wednesday, June 30, 2010

FBM KLCI - top reversal signal

Stocks on Bursa Malaysia ended broadly lower in tandem with the weak performances of regional markets, as market sentiment turned negative on renewed economic concerns and the sharp fall in China's stocks. The benchmark FBM KLCI fell 5.7 points or 0.43% to close at 1,319.84, after opening 0.66 point higher at 1,326.20. Losers outnumbered gainers by 514 to 175 while 252 counters were flat. Turnover, however, increased to 741 million shares worth RM1.059 billion from 535 million shares worth RM778 million on Monday.

The FBM KLCI opened 0.66 point higher and surged to the intra-day high of 1331.09 in the first fifteen minutes, and profit-taking activities came in thereafter to send the index lower as the day progressed, it hit the intra-day low of 1,315.82 before rebounding to close off-low. This led to the formation of a bearish engulfing candlestick, a top reversal signal, the key index is expected to correct downward further. The key index has now closed below the 5 and 10-day moving averages (MA), and is expected to move lower in the immediate term to test the lower support zone of 1300 to 1318.

MACD has started to hook downward, and the histogram continued to turn shorter, indicating a confirmed change in the direction of the momentum from up to down. RSI(14) at 55.5 fell lower into the neutral zone. Stochastic at 76.2 has crossed below the 80 level, confirming the beginning of the short term down cycle of the FBM KLCI.

The FBM KLCI is expected to correct downward after a month long rally from the recent bottom it registered on May 27th. It will re-test the support zone of 1300 to 1318, with key support levels at 1300, 1308 and 1315.

The short term trend of the FBM KLCI is starting to turn downward, the medium term trend is sideways, while the long term trend of the key index remained up.

Overnight, the Dow closed -268.22 points or -2.65% lower at 9,870.30. Today the FBM KLCI is likely to trade within a range of 1298 to 1331.

This week's expected range: 1293 – 1352
Today’s expected range: 1298 – 1331

Resistance: 1323, 1328, 1331
Support: 1298, 1307, 1313

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Wednesday, June 30, 2010

FBM KLCI - top reversal signal

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