FKLI (KLCI Future) Weekly Commentary 21/5/10

Same as FBMKLCI, we found a bearish divergence on FKLI on 4/5/10. Hence we expect the market is going to turn around. On 7/5/10, FKLI plunged 27.5 points before recover to loss only 5 points. Since then a technical rebound had started until 13/5/10 to form a lower high. It started to dip again on 14/5/10 until today 21/5/10. The market continues to dip for a total of 7 trading days since 14/5/10. All the indicators are pointing to down trend however the STC and the RSI indicate FKLI is oversold today. There could be a technical rebound before it continues to drop further. The nearest possible resistance levels for FKLI are 1287 and 1301. The nearest possible support levels are 1277 and 1270.


On 12/5/10, we shorted XX lots of June’s FKLI at 1335 and placed a buy stop at 1353 to 1355. We were holding the positions until today and managed to close them at 1280 today (21/5/10). We gained 55 points per lot, since 1 lot= RM50 X 55 points= RM2750 profit per lot. We took profit because technically the cash market is oversold, the short-term view either go sideway or short-term rebound. Any rebound above 1292 or higher is an opportunity to short but place a buy stop at 1303 or higher. We expect a selling pressure at about 1300 level. At the mean time we are sideline.  Please click on the chart to review.

Note: Someone may ask me why I placed a stop at 1353 (18 points above)? The reason is simple, bear divergence had formed and current sentiment is bearish. It will not reach there however a protection (insurance) is needed at all time to preserve our capital.