Composite Index Weekly Technical Analysis, 20/05/2005 

Main Chart:

For the week ended on May 20, 2005, KLCI lost a total of 8.19 point or 0.9%. As seen on the chart above, we saw KLCI moving in between the trading range of L1 and L2. Although on Friday, KLCI has violated the L2 marginally, the break down was yet to be confirmed.  Nevertheless, we see supports for KLCI falls on the 878.02 points of the WinChart Automatic Fibonacci Retracement line, as well as the L2, which is, at the moment, still intact. (Refer to A) 

Bollinger Bands:

KLCI has been staying below the 10 days Bollinger Middle Band ever since the break down on last Friday. However, the Bollinger Band width did not have a credible opening to trigger any signals. Therefore, the overall volatility of KLCI for the week was considered low. Anyhow, if wee see Bollinger band width open wider on the coming trading days with the KLCI situated below the middle band, more downside movement would be expected.

 Volume:

Total market volume for the week stood at 16,589,560 lots, 18.1% lower than last week’s total market volume. Market volume traded for the week had remained below the 40 days volume moving average thus signaling that the market participation was rather quiet. (Refer to B)

 MACD:

MACD had triggered a mid-term sell signal on Wednesday. With MACD line remained above the zero level, we would interpret it as the overall market sentiment remains cautiously positive. Up to this moment, we haven’t seen any sign of short-term reversal on the MACD histogram. If we see a “round bottom” on the MACD histogram, it would imply that the KLCI would take a minor rebound or correction.

 WinChart RSI:

WinChart RSI has breached below the 70% level since last Friday. Currently, WinChart RSI is situated in the neutral zone (between 30% - 70%). Since it is still located above the 50% level, we generally render that the KLCI is at a sideway market with a slight upside bias. (Refer to C)

 Stochastic:

Stochastic has gone down beneath 30% level, short-term bearish zone. It even hit over-sold region on Wednesday and rebounded on the next day. For Friday, Stochastic had contacted the 0% line, suggested that the KLCI for the short-term was heavily over-sold; therefore, we shall see another technical rebound very soon. (Refer to D)

 In the Nutshell:

Overall for last week, short-term sentiment of KLCI has turned bearish, while the mid to long term remained neutral. Provided KLCI does not break below the L2 support line, we shall expect KLCI to range bound for the immediate term. At the mean time, readers are advised to monitor the changes of Bollinger Band width to capture the next direction.

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