FBM KLCI / FKLI Morning Outlook 18 July 2011

Minor Violation Of Index Support During Healthy Correction
The FBM KLCI ended the 2nd week of July in slightly negative territory as local stock market make some path for correction. Generally, this event may have known as profit taking activities after the market had rose to record high past two weeks. These adjustment or market correction is needed to gauge how low could the Selling pressure push the market down before the Buyers step in and accumulate their positions. A healthy retracement should not expand over 50% measuring from the peak of the historical high and the low of previous low.

In this case, the swing high will be 1,598 while previous low was 1,536 level. Traders could use Fibonacci retracement tool to measure where does the correction could end. Judging from the price action on index futures, market is likely to head into a congestion period rather than resuming its preceding uptrend at the moment. It would require a clear higher lows formation once again if the market should continue climbing.  

Daily Pivot Point

R2= 1584

R1= 1582

S1= 1575

S2= 1571

HAPPY TRADING