The KLCI opened gap down on Friday, as pulled by the negative performance of the Dow Jones Industrial Average. As indicated by A, the KLCI broke below the 1250 support, and the 1250 WinChart Automatic Fibonacci Retracement is now being the resistance, while the supports are at 1242 followed by the 1231 WinChart Automatic Fibonacci Retracement.

As shown on the chart above, the Bollinger Bands expanded 1%, with the KLCI below the Bollinger Middle Band. If the Bollinger Bands should continue expanding, more downside volatility for the KLCI is expected.

As indicated by B, total market volume increased 47.9%, which is a sign of increasing selling pressure while some bargain hunting as well. Generally, the market would fall with huge volume, it is a sign of panic.

As indicated by C, the Stochastic fell below 10% level, suggesting that the short term movement of the KLCI is indeed weak. However, as the Stochastic is now below 10% level, it is a sign of a short term over-sold condition, thus a technical rebound is likely to take place in near term. However, as long as the Stochastic is still below 30% level, the short term bearish signal shall remain intact.

In conclusion, despite a chance of a technical rebound after being over-sold, the immediate outlook for the KLCI shall remain weak. Meanwhile, the performance of major markets abroad shall continue to play a major role is leading the local market as well.

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