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Wednesday, October 8, 2008

Composite Index 07/10/2008

Composite Index 07/10/2008

As indicated by A, the the KLCI opened lower on Tuesday as global markets closed lower. However, the KLCI managed to rebound from the Bollinger lower band, ended 0.39 points higher. Resistance for the KLCI remains at the psychological 1000 & 1011 Fibonacci Retracement while the support is still at 963.29 Fibo.

As shown on the chart above, the Bollinger Bands Width contracted 11%, suggesting the KLCI is still likely to consolidate, which is a best scenario for the KLCI from the technical analysis stand point. If the Bollinger Bands Width should continue to contract, the KLCI is expected to consolidate further while preparing for a new movement.
Nevertheless, with the KLCI situated below the Bollinger Middle Band, the immediate outlook for the KLCI is still cautiously bearish biased. The Bollinger Middle Band is still the dynamic resistance for the KLCI.

As indicated by B, total market volume increased 10.2%, with volume staying above the 40-day VMA level. If the KLCI should continue to rebound with volume above the 40-day VMA level, it would be a positive sign for the KLCI, and the KLCI would have a better chance to take out the resistance lines.

As circled at C, the MACD histogram is showing a rounding top, suggesting a short term weakening movement for the KLCI. But still, the priority of the analysis is still the primary indicator (Bollinger Bands) for during a consolidation, secondary indicators signal are usually less reliable.


Zhuge Liang

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