A correction is a reverse movement, usually negative, of at least 10% in a stock, bond, commodity or index to adjust for an overvaluation. Corrections are generally temporary price declines interrupting an uptrend in the market or an asset.
DEFINITION of ‘Uptrend‘ Describes the price movement of a financial asset when the overall direction is upward. A formal uptrend is when each successive peak and trough is higher than the ones found earlier in the trend.
Position Entry is the timing for an investor or trader to position they buying point onto a stock while pending for it’s price action and volume to take place riding the continuous trend.
WHEN an investor or trader decides to position into a particular stock, he/she must prepare at 1) what price range is the entry pricing zone, 2) shall price reacts the opposite at what price range is the stop loss pricing zone, 3) as profits starts building up when to take profits.
Can the FBMKLCI Bullish Momentum continues?
As seen from all our previous posts, the Malaysia FBMKLCI started its Bullish Uptrend Market since January 2017 and during each price retracement it will be supported by its EMA30days followed by further rallies. The psychological resistant of 1,800pts was close to hit as in the month of June 2017 the FBMKLCI went up to the highest 1,796pts before retracing into a month long price correction momentum which lasted till today. As seen from the chart above the June retracement did not get to support at its EMA30days but broken down into a longer price correction period which NOW ended at its EMA90days support. The consolidation at this EMA90days (1,753pts) are seen for the past 6 trading days. Moving forward in the coming days to next week, shall the market sentiment picks back up we will see the FBMKLCI testing its resistant of 1,775pts. A further break out from this level of 1,775pts will bring our index to retest a high of 1,800pts by the first week of August 2017 which means more trading activities can be seen in our market.
Penny Tech Stocks to go for a price correction?
As the FBMKLCI went for a month long of price correction bringing broad market stocks together, we’ve seen how the penny tech stocks been rallying instead during this month long of period. As shown on the chart above the FBMACE index shall go for a price correction perhaps towards its ema30days of support. Hence investor/trader may want to seek for some profits locking activity soon this week. As the FBMACE Index falls for a price correction, we may see the FBMKLCI starts to churn all the way up lifting the broad market stocks together.
Small Caps stocks on the move?
The FBMSCAP index that measures the small caps stocks performance shows a rather similar movement with the FBMKLCI. Supported at its EMA90days for the past week and its expected to build up the positive market sentiment this week moving all the way up. Hence you may start to see a lot of small caps stocks starts to show a bottoming effect from their respective support showing you an entry zone soon.
Bandar Malaysia effect lifting the market sentiment?
While Bandar Malaysia topic is back these are a few of the stocks linked with Bandar Malaysia for studies purposes. As we can see all of them have been through a rather drastic price correction over the past 2 months and have now found support at their EMA200days. (Some are below pending for breakout to turn into support)
(Click to enlarge)
Next blog post on:
“Metal, Steel, & Aluminium Stocks making a comeback?”