(M) Sdn Bhd 

On Friday, the Composite Index ended higher, gaining 5.01 points to 911.67 points. As indicated by the circle A, the KLCI is now situated above the 20 days Bollinger upper band. This is a sign that the KLCI is at an over-heated situation.

According to the historical data of the 20 days Bollinger bands, a pull-back effect is due to take place when this happen. For the coming trading days, a “red” candle or a Doji candle would signal the beginning of the pull-back effect, thus, KLCI is expected to consolidate. (Study A)

Total market volume for the day remained sound, as it is above the 40 days VMA level, which suggests that the market is well-participated. Provided we see the volume remain above the 40 days VMA level, market sentiment would still be positive bias. (Study B)

As circled by C, %K of the Stochastic has now gone above the 90% level, suggesting that the KLCI is indeed bullish. However, this is also another short-term over-heated signal suggesting that the KLCI is due for a technical correction. Nonetheless, since the %D remains above the 70%, market sentiment for the short-term remains bullish. (Study C)

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