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FBM KLCI - lower on profit-taking


KLCI 20141127Stocks on Bursa Malaysia closed lower yesterday on profit-taking after three straight days of gains and taking the cue from regional markets amid the fall in oil prices. The FBMKLCI shed 12.26 points or 0.67% to close at 1,829.91, after hovering between 1,845.76 and 1,828.04 throughout the day. Market breadth was negative with losers outpacing gainers by 567 to 252 with 304 counters unchanged. Total volume fell to 1.55 billion units worth RM1.36 billion from 1.73 billion units worth RM1.47 billion on Wednesday.

Despite the Dow closing at fresh record high, the FBMKLCI opened 3.97 points lower with a downside gap at 1,838.20 but rebounded strongly to hit the intra-day high of 1,845.76 in the next fifty minutes. However, the rebound could not sustain, and heavy profit-taking activity dragged the key index lower for the rest of the day to hit the intra-day low of 1,828.04 before rebounding slightly to close off low. Chart-wise, the FBMKLCI formed a bearish black candlestick with long upper shadow which indicates heavy profit-taking activity after the key index rebounded to hit the immediate overhead resistance level of 1,845, and confirmed the reversal signal seen on the previous day. Hence, the FBMKLCI is likely to continue to consolidate today with immediate downside support zone at 1,825 to 1,818, while the overhead resistance zone is at 1,838 to 1,845.

MACD was marginally higher, but its histogram contracted downward, indicating a reduction in the upward momentum. RSI (14) hooked downward strongly to 51.5 from 57.8, indicating a bearish downward move which sent turned the short term relative strength of the key index to a neutral state from a mildly bullish state. Stochastic hooked down to 79.3 from 83, indicating profit-taking correction after the key index entered the overbought zone, but the short term up cycle is still intact. Readings from the indicators showed that the FBMKLCI is in profit-taking correction, and is likely to further consolidate to neutralize the overbought situation.

The general trend of the FBMKLCI still remained down as the key index registered a lower high at 1,845.76 yesterday as compared with the recent pivot high of 1,858.03 on 3rd November. The bearish downward move yesterday has pulled the key index to close below the 5-day simple moving average (SMA) as well as the 60-day SMA, marking an end to the three-day rebound. Hence, the FBMKLCI is likely to further consolidate with immediate downside support zone at 1,826 to 1,823 provided by a cluster of short and medium term moving averages, where the 50-day SMA support is at 1,826 and 30-day SMA support at 1,823. A break of the 30-day SMA support at 1,823 may see the FBMKLCI slipping lower towards the 1,818 to 1,805 support zone.

Overnight, the US market was closed for Thanksgiving Day holiday, and over in Europe, the DAX rose 59.31 points or 0.6% to close at 9,974.87. Today, the FBMKLCI is likely to trade within a range of 1,805 to 1,863.

This week's expected range: 1778 – 1849
Today’s expected range: 1805 – 1863

Resistance: 1841, 1852, 1863
Support: 1805, 1816, 1823
Stocks to watch: AFG, CMSB, ENGTEX, IQGROUP, KIANJOO, L&G, MEGB, NCB, SOLID, SUNWAY, TEXCHEM

Disclaimer: The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. The Stocks to watch is not a recommendation to buy or sell the particular stock, as it is only meant for graduates of the "Share Trading the Pro Way" course as case study. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

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