Due to the overnight strong gain of the Dow Jones Industrial Average, the KLCI opened higher on Tuesday, while touching an intra-day high of 1072.07 points. However, the KLCI could not sustain its gain, and soon most of the early gains were given back due to profit taking as the KLCI is near the 1077 resistance, closing the day at 1063.62 points, up only 1.82 points.

Resistance for the KLCI remains at 1077 WinChart Automatic Fibonacci Retracement while the T2 line and the Bollinger Middle Band are still the dynamic support for the KLCI. Meanwhile, as indicated by A, the Bollinger Bands Width contracted another 18%, suggesting the KLCI is still in a consolidation stage.

As indicated by B, total market volume increased 31.6%, with volume returning to above the 40-day VMA level. This shows that the market participation is now relatively sufficient and if volume should remain above the 40-day VMA level, it would help the KLCI regain strength. Nevertheless, a healthy increased of volume should be associated with the rise in price, and therefore, if the KLCI should failed to break above the 1077 resistance in spite of strong volume, it would actually means that the resistance is strong, as selling pressure is higher than buying interest. This is an important factor which investors should never overlook.

As circled at C, the Stochastic started falling but still above 70% level, suggesting that the short term movement of the KLCI is still bullish biased. If the Stochastic should break below 70% level, it would be a signal suggesting a beginning of a technical correction.

Despite the strong gain of the Dow, most Asian markets opened higher but closed lower, so did the KLCI. Nevertheless, with the Bollinger Bands Width still contracting, there is not signal suggesting that the KLCI is regaining its bullishness yet.

Find this analysis useful? Why not share it with others? Click Here to send this to a friend

Straits Index (M) Sdn Bhd
No. 16, Jalan LP 1A / 5, Lestari Perdana,
43300 Seri Kembangan, Selangor
Hotline: (03) 8941 6828  (5 lines)   Fax: (03) 8941 9828    
Email: info@straitsindex.com
© Copyright 1997-2009 Straits Index (M) Sdn Bhd All rights reserved