The KLCI gained 8.77 points on Monday, to close at 1266.44 points. As indicated by A, the KLCI is now testing is short term resistance of 1266.45 WinChart Automatic Fibonacci Retracement, and if the KLCI should also break the next resistance at 1272 points, the KLCI could pick up more strength. Support for the KLCI is at 1250 to 1257 level.

As shown on the chart above, the Bollinger Bands contracted 1%, suggesting that the KLCI is still under consolidation. Nevertheless, if the Bollinger Bands should re-expands, it would be a signal suggesting an end to this consolidation, and a beginning of a new movement. If the Bollinger Bands should re-expands with the KLCI above the Bollinger Middle Band, the KLCI is expected to turn bullish.

As indicated by B, total market volume declined 3.7%, suggesting that the market is still relatively quiet, as the buying interests is still low. Nevertheless, this is a typical characteristic of a consolidating market. Generally, volume has to break above the 40-day VMA level in order for the KLCI to have some strength.

As indicated by C, the Stochastic rebounded, and testing 905 level, this suggests that the short term bullish signal is still intact. If the Stochastic should remain above 70% level, the short term bullish movement is expected to carry on, and the KLCI could even break away from the mid term bearish trend which started in January, 2010.

In conclusion, the KLCI rebounded on Monday as lead by the regional markets. The Stochastic is still showing sign of improvement for the short term movement, while waiting for more confirmation from the re-expansion of the Bollinger Bands as well as the volume above 40-day VMA level.

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