Composite Index ended the week of the 15th of July at 916.84 points, with a gain of a total 13.23 points. Weekly high was at 922.79 points while the weekly low was at 904.34 points.

Main Chart:
For this week, Composite Index was bullish, in which it breached above the 909.58 Fibonacci resistance line on Tuesday together with a break-away gap. At the moment, immediate resistance for KLCI stands at the 921.56 WinChart Automatic Fibonacci Retracement Line, while the support for KLCI falls on the 909.58 Fibonacci.

Mean while, KLCI had formed an ascending wedge chart pattern. With the W1 line as the dynamic resistance of the wedge, and the W2 line as the dynamic support for the ascending wedge. (Refer to A)

Bollinger Bands:
Using 20 days Bollinger Bands, we could detect an over-heated condition for KLCI on Tuesday in where the candle was above and above the Upper Band; inevitably, a pull-back effect happened on Wednesday.

10 days Bollinger Band on Friday contracted 11%, indicating that the KLCI is due for a technical correction. If KLCI were supported by 10 days Bollinger Middle Band after this technical correction, we shall hope for another rally when the Bolling Band width re-opens.

Volume:
For this week, daily market volume were not entirely exhilarating, but still met the basic requirement of the 40 days VMA level. Total market volume for the week stood at 27.58 million lots. Overall, market participation were considered active, and if KLCI were going for a technical correction, expect volume to retreat slightly, while keep in mind that volume trading above the 40 days VMA is imperative. (Study B)

MACD:
As indicated C, MACD histogram showed a "round-top" signal on Friday which suggests a technical correction for KLCI.. For the longer term, MACD line remains on the positive region, above the zero level, which suggests that the long-term market sentiment is favorable. On a negative side, MACD histogram presented a "bearish-divergence" where the second top is lower than the previous top. If the the market react to this divergence signal, 922.79 could be the temporary highest point for KLCI.. (Study C, and refer to the on-line tutorial for the divergence signals)

WinChart RSI:
Despite the rally of KLCI for the past two weeks, WinChart RSI showed no signs of bullish sentiment yet. This is because the WinChart RSI is still situated in the neutral zone, (30%-70%). Nevertheless, since RSI is now above the 50%, market sentiment for the mid-term is bullish bias. In line with the MACD histogram divergence signal, RSI also shows a bearish divergence signal where the indicator did not go in line with the recent rally. Again, if the KLCI react to this divergence signal, we shall suspect that KLCI is now at the temporary highest level. (Study D)

Stochastic:
Both %K and %D of Stochastic are now situated above the 70% level, a short-term bullish zone. As long as we see Stochastic staying above at this level, market sentiment for the short-term is still bullish. If Stochastic falls below the 70% level, immediate sentiment would turn to short-term neutral.

Weekly DMI:
Out of all the secondary indicators, the weekly DMI showed most promising signal for KLCI. Since DMI is a trend following indicator and it is a lagging indicator, it is used to spot the market trend as a whole, especially using a weekly chart. Since +DI had crossed the -DI, a bull trend signal is issued. We saw ADX moving slightly higher, which gave us some confirmation of the bullish trend signal.

In the Nutshell:
Overall market sentiment for KLCI has turn bullish, and majority of the indicators are showing positive signs. Although we see some conflicts in the indicators signal, (bearish divergence) these divergence signals are temporary only, unless longer term indicators reverse. Therefore, for the short-term, we expect some technical correction, and as long as KLCI maintain its position above the W2 dynamic support, no "Sell" signal is issued.

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