It seems like market sentiment is improving since the nearly 20-pt drop recorded last Friday and on Monday. On Tuesday, the index gapped up by slightly more than 3 pts at the opening and ended the day with a 7.95-pt gain. The resulting action was the formation of a “Bullish Harami” on Tuesday. In the subsequent session, the FBM KLCI shrugged off the poor US market performance, rebounding by slightly by more than 10 pts off the low and closing marginally lower. The market action that day basically suggested that sentiment was still at its highest since last Friday.
Yesterday, the FBM KLCI ended the day with a 4.24-pt gain and even closed above the 5-day downtrend line. It looks increasingly possible that the index will confirm the “Morning Star” bullish reversal pattern. A break above the 1,500 pt-level coupled with the violation of the 5-day MAV line would be sufficient to confirm the “Morning Star”.
If the market can successfully surpass the 1,500-pt mark today or next week, this means the breakdown from the short-term uptrend line will not drag the index further to the new uptrend line.
This is because market sentiment quickly turned around just below the short-term uptrend line, as is being portrayed by the “Morning Star”.
Anyway, the accuracy of the breakdown signal from the short-term trend line is usually not very high and we have never really been concerned about it. This is because we will continue to keep our bullish bias on the near-term stock market as long as it maintains a posture at above the new uptrend line. Having said that, as long as the FBM KLCI fails to crack above the 1,500-mark, there is a risk of the index retracing further, possibly towards the new uptrend line.
The next resistance still lies at the psychological 1,500 pt-mark, followed by the 1,524.69 pt-level. To the downside, the 1,479 pt-level is the immediate support, followed by the 1,439 pt-level.
Yesterday, the FBM KLCI ended the day with a 4.24-pt gain and even closed above the 5-day downtrend line. It looks increasingly possible that the index will confirm the “Morning Star” bullish reversal pattern. A break above the 1,500 pt-level coupled with the violation of the 5-day MAV line would be sufficient to confirm the “Morning Star”.
If the market can successfully surpass the 1,500-pt mark today or next week, this means the breakdown from the short-term uptrend line will not drag the index further to the new uptrend line.
This is because market sentiment quickly turned around just below the short-term uptrend line, as is being portrayed by the “Morning Star”.
Anyway, the accuracy of the breakdown signal from the short-term trend line is usually not very high and we have never really been concerned about it. This is because we will continue to keep our bullish bias on the near-term stock market as long as it maintains a posture at above the new uptrend line. Having said that, as long as the FBM KLCI fails to crack above the 1,500-mark, there is a risk of the index retracing further, possibly towards the new uptrend line.
The next resistance still lies at the psychological 1,500 pt-mark, followed by the 1,524.69 pt-level. To the downside, the 1,479 pt-level is the immediate support, followed by the 1,439 pt-level.
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