On Wednesday, the KLCI continued its rally, and it is about to test the 1350 resistance, which is a peak since the 2009 bull run. Therefore, this is going to be a strong resistance. The KLCI gained 8.21 points to close at 1341.08 points, with the 1325 still serving as the support.

As indicated by A, the Bollinger Bands expanded 27%, with the KLCI still above the Bollinger Middle Band, thus the immediate technical outlook remains bullish biased. Generally, the bullish biased movement shall carry on until the Bollinger Bands should contract.

As indicated by B, total market volume gained 39.6% on Wednesday, breaking above the 40-day VMA level. This suggests some increased of market participation, as well as the improvement of the investors' confidence. Generally, if volume could maintain above the 40-day VMA level, the market sentiment is likely to stay positive.

As circled at C, the Stochastic retreated slightly after hitting 100%, this implies an over-heating condition for the KLCI, as a technical correction is due to take place in the near future. However, provided that the Stochastic is still above 70%, the market movement for the short term is still bullish biased.

In conclusion, the KLCI has rallied for 7 days, and it is getting closer to the 1350 important resistance level. Coupled with the Stochastic over-heating signal, the KLCI is expected to have a technical correction in the near term. Nevertheless, provided that the KLCI could stay above the 14, 21, 31 EMA as well as the Bollinger Middle Band, the uptrend is still intact.

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