Composite Index Weekly Technical Analysis, 03/06/2005 

Main Chart:

For the past week, KLCI had been tested and retested the all important support level at 860 points, and managed to close above it at 865.88 points. For the week, KLCI gave up 3.23points. Support remained at the S1 support line, where as the resistances are at the 10 day Bollinger Middle Band dynamic resistance and the R1 line respectively. 

Bollinger Band:

For the entire week, KLCI was below the Bollinger middle band. On Friday, Bollinger Band has finally contracted, indicating that the KLCI is consolidating. Nevertheless, KLCI remained below the middle band; therefore KLCI immediate outlook remain bearish bias, until it breaks out above the middle band successfully. (Refer to A) 

Volume:

For the week, total market volume was up 45.6%. For most part of the week, volume was higher than the 40 days VMA, giving strength to the technical rebound of KLCI. This was a good sign for a strong volume indicating the market was relatively active where by some buying interests kept the KLCI staying above the important 860 point level. (Refer to B)

 MACD:

MACD histogram showed a clear “round bottom” signal, indicating the KLCI was indeed consolidating with a technical rebound. Correction shall continue until the MACD histogram shows new sign of “round top”. However, since the MACD line is still under the zero level, overall market sentiment remained weak. (Refer to C) 

WinChart RSI:

WinChart RSI stayed below the 30% level for the past week, in the mid-term bearish zone. Until WinChart RSI successfully break above the 30% level, mid-term market sentiment remain bearish. (Refer to D) 

Stochastic:

Similar to the RSI, Stochastic was below the 30% level for the entire week, in the short-term bearish zone. This indicated that the short-term market sentiment was bearish and weak. Nevertheless, if Stochastic were able to break above the 30% level, it will indicate a short-term neutral sentiment for KLCI. (Refer to E) 

In the nut shell:

In short, KLCI had a technical rebound, staying above the important 860 level successfully. It pays to watch out for this support level, for a break below this level could grant the KLCI more downside room. On the other hand, if KLCI manage to close above the 10 days Bollinger Middle band, it will significantly ease the downside risk.

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