Thursday, 18 May 2017

19 May 2017 - Selling into rallies may be wise.


A narrower price band was seen on 18 May, with a 7.76-point range traded between 1,769.80 and 1,762.04. The index gapped down and tumbled 8.48-points on persistent selling activities to settle at 1,767.17. 

Supports at 1,748, 1,754 and 1,762 may be weaker for 19 May, whilst heavy profit taking at the 1,767, 1,772 and 1,787 resistance areas will cap the index rise. Three indicators (CCI, DMI and Oscillator) we monitor are positive, signalling that a further medium-term price rise may be possible (as the index held above 1,651.45). Its Stochastic and MACD have turned negative.

Investors may take profit, as the index turned into neutral territory and moved between the 18 and 40 SMA on 18 May. The FKLI contracts (May, Jun, Sep & Dec 2017) turned below par (ranging from a 6.17-point to an 8.17-points discount) against the index on selling activities. 

Despite the US markets' minor rebound of 56.09-points on 18 May, the index may be range-bound today. Obvious bearish divergence on its ADX, CCI, DMI, MACD, MACD Histogram and Oscillator may cause heavy selling on rallies for the FBMKLCI today. The index had recently stalled at 1,787.54 on 16 May 2017. 

Emerging markets in South America like Brazil and Argentina were roiled by 8.80% and 2.95% overnight. Therefore, emerging markets in Asia today may be adversely affected too. 

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