20051027 Technical Outlook JetFM
CI closed up on 2nd day; but stock portfolio liquidation continued. After registering a 1st up close on 25/10/2005 since 13/10/2005, CI continued to rise to an intraday high of 907.79 on some bargain hunting activity before settled at 905.21. However, CI could not sustain well at higher level as "Funds" again saw that as an opportunity to further liquidate their stock portfolio. For Thursday market, Pivot Profit methodology indicates that the 1st and 2nd resistance levels will be 907.4 & 909.9; 1st and 2nd support levels will be 903.0 & 900.9.
Chart wise: Strong hands not seen in the trade. CI may have traded at 903.33 on the opening bell, 1.42 points lower than previous day close of 904.75; but the stock index charged its way up to a high of 907.79 to give an indication that there was certain buying interest in the market. An analysis of this price behavior revealed that the buying interest may want to see the CI higher; however, they were not strong enough to keep the up move as bigger selling pressure was waiting to unload each time CI tried to go higher. Anyone who took a glance at the CI performance would agree that CI seemed to have stabilized in the past 2 days, some buying interest were noted to support the CI. On examination of the recent price and volume relationship, strong hands were still not in sight, they were not buying; so, whoever bought in the market in the past few days were the weak hands. CI had a 2nd up close in a row after a string of 9th consecutive down closes from 12/10/2005 to 24/10/2005; we should therefore be seeing a few more up closes in next few days. While it is certainly healthy to see some up closes, we should not be getting over excited of that on the other hand. With a close of 905.21, CI now has 3 closes below 909-level, that certainly would strengthen the technical evidence of the valid violation of CI on 24/10/2005. In addition, the base formation was not solid enough to create an urgent buy scenario, market may carry the CI higher; but these up closes would only be reactions of the recent downward move. In fact, the base was rather weak, 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. A study of the market action showed that buying power was greater than selling pressure. CI could trade higher than 907.79.
Technical wise: MACD line cut down the signal line from above to emit a "sell" signal on 17/10/2005. MACD readings fell to -4.09 (26/10/2005) from -3.57 (25/10/2005) with signal line readings also dropped to -1.88 (26/10/2005) from -1.25 (25/10/2005), an indication of a downtrend market. On Directional Movement Index, -DMI continued to stay above the +DMI. On the reading scales, -DMI was down to 36 from 43 on 25/10/2005 and +DMI was up to 4 from 1 on 25/10/2006. ADX rose higher from 73 (25/10/2005) to 74 (26/10/2005), an indication of a better trending situation compared to 25/10/2005. 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 rose to 10.11 from 11.6 (25/10/2005) with %D also fell from 17.4 (25/10/2005) to 13.7 (26/10/2005). Traders must therefore start to exercise some caution for a possible correction.
Our stock recommendation for today is:
Lion Diversified (Trading Buy) at RM1.95 with a stop loss at RM1.84
Chart wise: Strong hands not seen in the trade. CI may have traded at 903.33 on the opening bell, 1.42 points lower than previous day close of 904.75; but the stock index charged its way up to a high of 907.79 to give an indication that there was certain buying interest in the market. An analysis of this price behavior revealed that the buying interest may want to see the CI higher; however, they were not strong enough to keep the up move as bigger selling pressure was waiting to unload each time CI tried to go higher. Anyone who took a glance at the CI performance would agree that CI seemed to have stabilized in the past 2 days, some buying interest were noted to support the CI. On examination of the recent price and volume relationship, strong hands were still not in sight, they were not buying; so, whoever bought in the market in the past few days were the weak hands. CI had a 2nd up close in a row after a string of 9th consecutive down closes from 12/10/2005 to 24/10/2005; we should therefore be seeing a few more up closes in next few days. While it is certainly healthy to see some up closes, we should not be getting over excited of that on the other hand. With a close of 905.21, CI now has 3 closes below 909-level, that certainly would strengthen the technical evidence of the valid violation of CI on 24/10/2005. In addition, the base formation was not solid enough to create an urgent buy scenario, market may carry the CI higher; but these up closes would only be reactions of the recent downward move. In fact, the base was rather weak, 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. A study of the market action showed that buying power was greater than selling pressure. CI could trade higher than 907.79.
Technical wise: MACD line cut down the signal line from above to emit a "sell" signal on 17/10/2005. MACD readings fell to -4.09 (26/10/2005) from -3.57 (25/10/2005) with signal line readings also dropped to -1.88 (26/10/2005) from -1.25 (25/10/2005), an indication of a downtrend market. On Directional Movement Index, -DMI continued to stay above the +DMI. On the reading scales, -DMI was down to 36 from 43 on 25/10/2005 and +DMI was up to 4 from 1 on 25/10/2006. ADX rose higher from 73 (25/10/2005) to 74 (26/10/2005), an indication of a better trending situation compared to 25/10/2005. 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 rose to 10.11 from 11.6 (25/10/2005) with %D also fell from 17.4 (25/10/2005) to 13.7 (26/10/2005). Traders must therefore start to exercise some caution for a possible correction.
Our stock recommendation for today is:
Lion Diversified (Trading Buy) at RM1.95 with a stop loss at RM1.84
posted by emacro @ 6:18 PM
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