23rd September 2011, Friday

FBMKLCI

Another 100 Points?

Yesterday, the FBMKLCI struggled to sustain above the important level that we were looking at (1404 – 1400 levels) and close at its day low of 1387 (a Marubozo(1) created). As per mentioned, if these levels are not able to be supported, overall market will resume its strong downtrend with the next reliable support level is seen at 1350 only.

Sorry to say that the probability for the index to trade towards 1300 is higher for now as in a bear market, we are expecting the index to retreat about 20%.

How furious will the bears be? Where is the reliable support level? Will the market really retreat to 1300 level? With the budget announcement exactly a week to go, can this help to cushion the downside? Can we pick up certain shares for short term trading? Is this the level to bargain hunt for long term trading? For detail analysis, I will cover in my next week report.

Explanation:

1)      Marubozu: In Japanese candlestick, Marubozu indicating a weak market where sellers fully control the price action and further weakness is expected.

FKLI

The same goes for FKLI, the index convincingly taking over the 1400 level, indicating the strong downward trading for the near term. As per mentioned, investors should initiate short position with the stop loss level being set around the 1400 level if the FKLI unable to sustain above the 1400 level. Risk takers investors should standardize all your stop loss level to 1420 levels (short position from 1500 level and the 1400’s short position).

FCPO

Range Trading Resume…

The FCPO resumes its range trading and trades at its lower range at this moment. Investors can remain to profit from the range trading with the stop loss level being set around 20 points. As per mentioned, nothing much to look at if the FCPO remains stuck in the range.

However, investors will need to take extra cautious of this sideways trading. As the period drags longer for the consolidation, the FCPO is facing higher risk of trading either direction very strongly. Thus, the breakthrough of either direction (either 3080 or 2975) will indicate the near term market direction that we shall be looking at.