Chart 1: FBM-KLCI's daily chart as at May 6, 2010 (Source: Tradesignum)
If we looked back to bull rally of 2006-7, we can also see how strong is the support of the 10-week SMA line (which is equivalent to the 50-day SMA line). On the 3 occasions when it was violated (denoted as X, Y & Z), the market suffered sharp selldown. See Chart 2 below.
Chart 2: FBM-KLCI's weekly chart as at May 6, 2010 (Source: Tradesignum)
From the above, it is important that the FBM-KLCI stays above the 50-day SMA line or 10-week SMA line at 1322-24. A break below this level could easily send the market to the psychological 1300 level (which almost coinciding with the support of 100-day SMA line, presently at 1297) and even the 200-day SMA line, presently at 1256.
5 comments:
Hi Alex,
I am looking at 1320 as well based on 50 SMA. I really appreciate your post on 10 weeks SMA.
Actually I doubt who is behind to keep buying Msia stocks these few days while world market slumped.
Anyway, I stay sideline since 2 weeks go.
Thanks for your valuable comments.
Dear Alex,
It is not a shock that due to panic sell down ,on opening the index has violated the 50D SMA @ below 1320-1322.,eventhough it " is managed " to raise just over 1 point above yesterday closing at 5:00 p.m.!
Hopefully, the PIGS problems plus USA own land confusions can be subdued OR cooled down soon, the KLCI may look very ugly indeed in the near future!
Thanks for your feedback/comments.
well... i think there is somebody bhind the market such as EPF(this is wat i guess) is supporting the market... i think this is a very good sign n there will some big rally after this crisis... anyway... i will b waiting with my cash rite now... until the world had settled down...
Hi guys,
It is possible that some kind of Plunge Protection Team may be operating in our market, just like in America. If this team exists, then I presume that their activities would be technical-driven, with the objective of providing liquidity at critical market juncture. This activity is not bad on its own, especially when the market entered into a panic mode. What happened last Thursday on Wall Street was a '12th sigma event', according to Dennis Gartman, author of the daily investment letter of the same name and contributor to CNBC. What's a '12th sigma event'? It is a massive shift in prices that are “out there” on the edges of the bell shaped curve that may occur only ONCE EVERY SEVERAL THOUSAND YEARS.
Nevertheless, the market which has gone up a lot over an extended period, would be more receptive to sharp corrections. A market top is also a possibility. Be careful out there.
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