2005026 Technical Outlook JetFM
CI broke below 907.37 low on continued stock portfolio liquidation. Low buying interest capped CI from going up, the stock index went up to an intraday high of 906.87 as light bargain hunting activity pushed the CI higher after the opening bell; but "Funds" saw that as an opportunity to further liquidate their stock portfolio. As a result, CI fell to below previous day's low of 904.45 to reach 902.60 before closed at 904.7. For Wednesday market, Pivot Profit methodology indicates that the 1st and 2nd resistance levels will be 906.88 & 909.01; 1st and 2nd support levels will be 902.61 & 900.47.
Chart wise: CI settled below 909, 900-level to be broken on intraday basis. 900-level was nearly tested as CI traded down to 902.6; but the buying interest was weak to lift the CI higher, stock index closed below 909 again on a 2nd consecutive day after the violation on 24/10/2005. As a rule of thumb, a minimum of 3 closes below 909 was required to strengthen the technical evidence of a valid violation, we still short of 1 close below 909. With a close of 904.75, CI finally has 1 up close after registering 9th consecutive down close since 12/10/2005. An up close after a string of down closes was in fact a healthy sign for the market, it gave market a chance to align what to be adjusted, we could now expect a few more up closes in next few days. An up close should not be deemed as a beginning of a rally. Traders should not rush to buy more stocks even they may appear "cheap"; instead, they should take that as an opportunity to further reduce stock portfolio in hand. Market may carry the CI higher; but these up closes would only be market reactions of the recent downward move. As at 25/10/2005, CI has not provided any concrete positive sign of turning up yet. CI may have closed at 904.75, slightly higher than previous close of 904.7; but a study of the market action showed that selling pressure was greater than buying power. CI could trade lower than 902.6; however, some renewed buying interest would be seen as CI goes near 900 - 904 level today. A preliminary review indicated that an intraday break below 900 would be likely in today's market; however, there would be market attempts to push the CI back up 900-level. In an analysis of Fibonacci Retracement studies, CI next downside target would be 888 based on was at 161.8% retracement of a move from 953.88 (4/8/3005) to 906.54 (2/9/2005).
Technical wise: MACD line cut down the signal line from above to emit a "sell" signal on 17/10/2005. MACD readings fell to -3.57 (25/10/2005) from -2.8 (24/10/2005) with signal line readings also dropped to -1.25 (25/10/2005) from 0.59 (24/10/2005), an indication of a downtrend market. On Directional Movement Index, -DMI continued to stay above the +DMI. On the reading scales, -DMI was flat at 43, unchanged from 24/10/2005 and +DMI was down to 1 from 2 on 24/10/2006. ADX rose higher from 67 (24/10/2005) to 73 (25/10/2005), an indication of a better trending situation compared to 24/10/2005. As for Stochastics, %K line continued to stay below the %D line in the oversold zone. %K line was seen starting to curve up slightly, instead of moving further from %D line, a sign of bottom out. %K dropped to 11.6 from 15 (24/10/2005) with %D also fell from 23.2 (24/10/2005) to 17.4 (25/10/2005). Traders must therefore start to exercise some caution for a possible correction.
Our stock recommendations for today are:
Digi (Trading Buy) at RM6.15 with a stop loss at RM5.90
Redtone (Trading Buy) at RM1.80 with a stop loss at RM1.69
Chart wise: CI settled below 909, 900-level to be broken on intraday basis. 900-level was nearly tested as CI traded down to 902.6; but the buying interest was weak to lift the CI higher, stock index closed below 909 again on a 2nd consecutive day after the violation on 24/10/2005. As a rule of thumb, a minimum of 3 closes below 909 was required to strengthen the technical evidence of a valid violation, we still short of 1 close below 909. With a close of 904.75, CI finally has 1 up close after registering 9th consecutive down close since 12/10/2005. An up close after a string of down closes was in fact a healthy sign for the market, it gave market a chance to align what to be adjusted, we could now expect a few more up closes in next few days. An up close should not be deemed as a beginning of a rally. Traders should not rush to buy more stocks even they may appear "cheap"; instead, they should take that as an opportunity to further reduce stock portfolio in hand. Market may carry the CI higher; but these up closes would only be market reactions of the recent downward move. As at 25/10/2005, CI has not provided any concrete positive sign of turning up yet. CI may have closed at 904.75, slightly higher than previous close of 904.7; but a study of the market action showed that selling pressure was greater than buying power. CI could trade lower than 902.6; however, some renewed buying interest would be seen as CI goes near 900 - 904 level today. A preliminary review indicated that an intraday break below 900 would be likely in today's market; however, there would be market attempts to push the CI back up 900-level. In an analysis of Fibonacci Retracement studies, CI next downside target would be 888 based on was at 161.8% retracement of a move from 953.88 (4/8/3005) to 906.54 (2/9/2005).
Technical wise: MACD line cut down the signal line from above to emit a "sell" signal on 17/10/2005. MACD readings fell to -3.57 (25/10/2005) from -2.8 (24/10/2005) with signal line readings also dropped to -1.25 (25/10/2005) from 0.59 (24/10/2005), an indication of a downtrend market. On Directional Movement Index, -DMI continued to stay above the +DMI. On the reading scales, -DMI was flat at 43, unchanged from 24/10/2005 and +DMI was down to 1 from 2 on 24/10/2006. ADX rose higher from 67 (24/10/2005) to 73 (25/10/2005), an indication of a better trending situation compared to 24/10/2005. As for Stochastics, %K line continued to stay below the %D line in the oversold zone. %K line was seen starting to curve up slightly, instead of moving further from %D line, a sign of bottom out. %K dropped to 11.6 from 15 (24/10/2005) with %D also fell from 23.2 (24/10/2005) to 17.4 (25/10/2005). Traders must therefore start to exercise some caution for a possible correction.
Our stock recommendations for today are:
Digi (Trading Buy) at RM6.15 with a stop loss at RM5.90
Redtone (Trading Buy) at RM1.80 with a stop loss at RM1.69
posted by emacro @ 11:57 PM
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