On Monday, active profit taking activities pulled the KLCI lower. At the close, the KLCI fell 14.25 points or 0.90 % to 1564.75 points. As indicated by A, the KLCI is testing the 14, 21, 31 EMA dynamic support as well as the uptrend line. If the KLCI should break below this uptrend line, it would interrupt the uptrend which was formed since October, 2011. Resistance for the KLCI stays at 1597.08 or 1600 mark.

As indicated by B, total market volume fell 2.94%, with volume below the 40-day Volume Moving Average. This suggests that the market overall is still relatively quiet, as investors reduce their positions amid lower market confidence. Meanwhile, losers outnumbered gainers again, with 516 losers over 260 gainers. If volume should stay low, it is less likely for the KLCI (or the market in general) to hold its uptrend.

As indicated by C, the Stochastic is now testing the 30% level. If the Stochastic should break below this level, it would trigger a short-term bearish signal, suggesting a weakening short-term movement for the KLCI.

In conclusion, even if the KLCI uptrend should be interrupted by the stronger profit taking activities, it does not mean that the KLCI is having its reversal right away. Support for the KLCI is at 1530 -1540. If the KLCI should break below this support or forms lower-highs, then it would be an early signal suggesting a possible reversal formation.