20051024 Technical Outlook JetFM
Long liquidation continued to pressure CI. Following the sharp fall on 19/10/2005, long liquidation on stock portfolio continued to pressure the CI to go lower, CI fell to an intraday low of 907.37 before closed at 909.58 as "Funds" reduced their stock position further ahead of weekend. For Monday market, Pivot Profit methodology indicates that the 1st and 2nd resistance levels will be 913.42 and 917.27; 1st and 2nd support levels will be 906.66 and 903.53.
Chart wise: 8th consecutive down close, a lower market was expected. CI registered a 8th consecutive down close since 12/10/2005, the straight down close patterns certainly did not look good in the eyes of traders, some of the stock may have looked cheaper. But traders were not willing to jump into the game to pick up stocks yet and would likely to continue staying sideline for a another few days as there was still no "clear" sign of market making an up turn as at 21/10/2005. In view of that, CI was expected to trade lower than 907.37. But some renewed buying interest would be seen as CI goes near 904-level and this buying action would likely to carry the CI to close above 909. As mentioned earlier in previous write up, it was important for CI NOT to close below 909, this market view still hold. Nevertheless, should the buying power not strong enough to carry the CI to close above 909 as expected, a stronger bearish scenario would be created, we would be in for more downside. Having studied the price action on 21/10/2005, it seemed that there was now a higher possibility of CI to close below 909 on Monday. We must be prepared for it to happen. The volume on last Friday was below 300 million shares, lower than that of 20/10/2005, it basically reflected low trading interest in the market with no much of panic selling pressure or keen buying power. A preliminary analysis of this price and volume relationship showed that a lower market could be expected; however, downside could be limited, unless the close below 909 would be accompanied with decisive volume. In an analysis of Fibonacci Retracement studies, CI was at 93.58% 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 -1.78 (21/10/2005) from -0.92 (20/10/2005) with signal line readings also dropped to 0.04 (21/10/2005) from 0.56 (20/10/2005), an indication of stock market into downtrend. On Directional Movement Index, -DMI continued to rise above the +DMI as market closed lower. On the reading scales, -DMI rose to 45 from 42 (20/10/2005) and +DMI was slightly lower to 2 (21/10/2005) from 3 on 20/10/2006. ADX rose higher from 54 (20/10/2005) to 61 (21/10/2005), an indication of a better trending situation compared to 20/10/2005. As for Stochastics, %K line continued to stay below the %D line in the neutral zone. %K line moved further away from %D line, a sign of lower market. %K dropped to 22.8 from 31.4 (20/10/2005) with %D also fell from 39.9 (20/10/2005) to 31.3 (21/10/2005). However, %K was approaching the oversold zone, traders must therefore start to exercise some caution(s) for a possible correction in next few days.
Our stock recommendation for today is:
Samudra (Trading Buy) at RM2.20 with a stop loss at RM1.98
Chart wise: 8th consecutive down close, a lower market was expected. CI registered a 8th consecutive down close since 12/10/2005, the straight down close patterns certainly did not look good in the eyes of traders, some of the stock may have looked cheaper. But traders were not willing to jump into the game to pick up stocks yet and would likely to continue staying sideline for a another few days as there was still no "clear" sign of market making an up turn as at 21/10/2005. In view of that, CI was expected to trade lower than 907.37. But some renewed buying interest would be seen as CI goes near 904-level and this buying action would likely to carry the CI to close above 909. As mentioned earlier in previous write up, it was important for CI NOT to close below 909, this market view still hold. Nevertheless, should the buying power not strong enough to carry the CI to close above 909 as expected, a stronger bearish scenario would be created, we would be in for more downside. Having studied the price action on 21/10/2005, it seemed that there was now a higher possibility of CI to close below 909 on Monday. We must be prepared for it to happen. The volume on last Friday was below 300 million shares, lower than that of 20/10/2005, it basically reflected low trading interest in the market with no much of panic selling pressure or keen buying power. A preliminary analysis of this price and volume relationship showed that a lower market could be expected; however, downside could be limited, unless the close below 909 would be accompanied with decisive volume. In an analysis of Fibonacci Retracement studies, CI was at 93.58% 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 -1.78 (21/10/2005) from -0.92 (20/10/2005) with signal line readings also dropped to 0.04 (21/10/2005) from 0.56 (20/10/2005), an indication of stock market into downtrend. On Directional Movement Index, -DMI continued to rise above the +DMI as market closed lower. On the reading scales, -DMI rose to 45 from 42 (20/10/2005) and +DMI was slightly lower to 2 (21/10/2005) from 3 on 20/10/2006. ADX rose higher from 54 (20/10/2005) to 61 (21/10/2005), an indication of a better trending situation compared to 20/10/2005. As for Stochastics, %K line continued to stay below the %D line in the neutral zone. %K line moved further away from %D line, a sign of lower market. %K dropped to 22.8 from 31.4 (20/10/2005) with %D also fell from 39.9 (20/10/2005) to 31.3 (21/10/2005). However, %K was approaching the oversold zone, traders must therefore start to exercise some caution(s) for a possible correction in next few days.
Our stock recommendation for today is:
Samudra (Trading Buy) at RM2.20 with a stop loss at RM1.98
posted by emacro @ 6:18 PM
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