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Tuesday, October 7, 2008

Composite Index Daily Technical Analysis 06/10/2008

Composite Index Daily Technical Analysis 06/10/2008 By Zhuge Liang
As indicated by A, the Bollinger Bands Width expanded 10%, with the KLCI situated below the Bollinger Middle Band, closing 19.86 or 2% lower on Monday, and breaking below the 1000 psychological mark. Nevertheless, the KLCI is now temporary supported by the Bollinger lower band. Support for the KLCI is at 963.29 Fibonacci Retracement while the resistance are at the Bollinger Middle Band followed by the 1011 Fibo.

As shown on the chart, the Bollinger Bands Width only started to expands, and it is considered as an early stage of the signal. If the KLCI should rebound in the near term, the consolidation is likely to continue, thus reducing the risk of continuation of the downtrend. However, with negative sentiment across the globe, the KLCI is likely to be affected by the regional markets.

As indicated by B, total market volume increased 26% on Monday, and breaking above the 40-day VMA level. This suggests some bargain buying activities as the KLCI is falling. However, as the KLCI is still falling, these bargain are likely to be speculative.

As circled at C, the Stochastic fall from 70% level to below 10% level, again, this signal might be too sensitive as the KLCI is basically still consolidating. Therefore, the priority of the analysis should still be on the primary indicator like the Bollinger Bands. Nevertheless, if the Stochastic should remain below 30% level, the short term market movement for the KLCI is likely be bearish biased.

To sum up, the expansion of the Bollinger Bands Width is suggesting a beginning of a new movement, and the KLCI staying below the Bollinger Middle Band is generally a negative signal. If the Bollinger Bands Width should expands further, the risk of further downside movement would increased.


Jackie Lee said...

In the long run, what level did you expect the KL Composite Index would touch?

These 3 months before year 2009.

Zhuge Liang said...

Hi jackie,

3 mths in ZL's timeframe is still short term.

What would KLCI be like by Dec 08? Wow! That is MILLION RGT question.

If ZL knows for sure ....ZL would hammer FKLI LONG Dec wholesale. FKLI Dec is 977 around 20 pts discount. And if ZL knows for sure u can buy any many winners in stocks but how many can beat mt fkli profits when FKLI goes PREMIUM comes month of DEC 2008?

3x KLCI broke 1000 and rebounded off low. That shows CI undertone is NOT that lembik but that weak knees may not hold out too strongly if the bigblues keep getting hammered.

Hopefully window dressing comes earlier than normal.

Bottomline is ......... ZL is optimist and optimistically window dressing mth hopefully won't become a non-event and ruined by DJIA. Wall St is in crisis and ZL wishes China & Japan will intervene somewhere between now and Dec 08.

All angles considered, ZL will be wishing for anything between 1060 >>> 1080 for KLCI comes DEC 2008.

This is just a personal opinion. Dun mortgage your house and sailang all in BURSA. There is every possibility u would be sleeping out in the streets if you do that. NEVER SAY NEVER IN THIS MKT.

Take care. & goodluck2u.

Zhuge Liang