20051028 Technical Outlook JetFM
Stock portfolio liquidation forced CI to close lower. A consecutive 2 up closes managed to roll in some buying interest in the stock market, CI subsequently rose to reach an intraday high of 909.14 before settled at 904.46 as "Funds" saw a higher CI as another good opportunity for them to continue liquidating their stock portfolio at a better gain. For Friday market, Pivot Profit methodology indicates that the 1st and 2nd resistance levels will be 908.0 & 911.5; 1st and 2nd support levels will be 902.0 & 899.6.
Chart wise: Strong hands not seen in the trade. CI traded to an intraday high of 909.14; but the stock index could not sustain its momentum on the high side as stock portfolio liquidation continued to pour in to take advantage of higher stock prices. CI may have seemed to have stabilized with 2 up closes in a row at 904-level, the negative impact from the sharp fall on 19/10/2005 and a string of 9 down closes still linger strongly in "Funds" mind, these "Funds" were believed to have made a "decision" to sell into the market as CI goes higher, they no longer willing to take the risk of just watching CI going higher without selling to realize some profit. That's the reason why CI encountered some resistance each time it tried to go higher. In other words, "Funds" could have probably changed their market view from bullish to bearish; thus, by selling into rallies, they could recoup some cash now to buy stock at cheaper price later when CI falls below 900-level. An analysis of the market action revealed that strong hands have been selling since late September 2005, they were not seen in the market to buy recently when CI fell nearly to 900-level, the buying interest we saw were the weak hands. Furthermore, the most recent 3-day bars did not present a solid ground for the market to stage a strong rally. A study of CI behavior yesterday showed that selling pressure was greater than buying power. CI was therefore expected to trade lower than 903.19.
Technical wise: MACD line cut down the signal line from above to emit a "sell" signal on 17/10/2005. MACD readings fell to -4.52 (27/10/2005) from -4.09 (26/10/2005) with signal line readings also dropped to -2.47 (27/10/2005) from -1.88 (26/10/2005), 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 29 from 36 on 26/10/2005 and +DMI was up to 8 from 4 on 26/10/2006. ADX fell lower from 74 (26/10/2005) to 71 (27/10/2005), an indication of weaken trending situation compared to 26/10/2005. As for Stochastics, %K line continued to stay below the %D line in the oversold zone. %K line was seen continue to curve up slightly to get closer to %D linee, a sign of bottom out. %K fell to 9.22 from 10.11 (26/10/2005) with %D also fell from 13.7 (26/10/2005) to 11.4 (26/10/2005). Traders must therefore start to exercise some caution for a possible correction.
Our stock recommendation for today is:
Tronoh Mines (Trading Buy) at RM3.20 with a stop loss at RM3.10
Chart wise: Strong hands not seen in the trade. CI traded to an intraday high of 909.14; but the stock index could not sustain its momentum on the high side as stock portfolio liquidation continued to pour in to take advantage of higher stock prices. CI may have seemed to have stabilized with 2 up closes in a row at 904-level, the negative impact from the sharp fall on 19/10/2005 and a string of 9 down closes still linger strongly in "Funds" mind, these "Funds" were believed to have made a "decision" to sell into the market as CI goes higher, they no longer willing to take the risk of just watching CI going higher without selling to realize some profit. That's the reason why CI encountered some resistance each time it tried to go higher. In other words, "Funds" could have probably changed their market view from bullish to bearish; thus, by selling into rallies, they could recoup some cash now to buy stock at cheaper price later when CI falls below 900-level. An analysis of the market action revealed that strong hands have been selling since late September 2005, they were not seen in the market to buy recently when CI fell nearly to 900-level, the buying interest we saw were the weak hands. Furthermore, the most recent 3-day bars did not present a solid ground for the market to stage a strong rally. A study of CI behavior yesterday showed that selling pressure was greater than buying power. CI was therefore expected to trade lower than 903.19.
Technical wise: MACD line cut down the signal line from above to emit a "sell" signal on 17/10/2005. MACD readings fell to -4.52 (27/10/2005) from -4.09 (26/10/2005) with signal line readings also dropped to -2.47 (27/10/2005) from -1.88 (26/10/2005), 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 29 from 36 on 26/10/2005 and +DMI was up to 8 from 4 on 26/10/2006. ADX fell lower from 74 (26/10/2005) to 71 (27/10/2005), an indication of weaken trending situation compared to 26/10/2005. As for Stochastics, %K line continued to stay below the %D line in the oversold zone. %K line was seen continue to curve up slightly to get closer to %D linee, a sign of bottom out. %K fell to 9.22 from 10.11 (26/10/2005) with %D also fell from 13.7 (26/10/2005) to 11.4 (26/10/2005). Traders must therefore start to exercise some caution for a possible correction.
Our stock recommendation for today is:
Tronoh Mines (Trading Buy) at RM3.20 with a stop loss at RM3.10
posted by emacro @ 7:47 PM
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