For the week ended on the 16th of September, the Composite Index closed at 921.99 points, gained 4.07 points.

Main Chart:
For this week, KLCI was trading at a narrow range of 8.3 points between the 920 resistance and the 10 days Bollinger middle band dynamic support, and until Friday, the KLCI breach above the 920 resistance marginally. Therefore, immediate support for KLCI falls on the 920 level, followed by the bollinger middle band.

At the same time, it is worth while to know that the 906 level is the important support for KLCI, for it is the 50% retracement of the recent rally from 860 level to 953 level. According to the historical chart of the KLCI, we found out that the similar support happened during December of 2003, as well as March of 1999. Although nobody could know if the KLCI is going to have a rally just like what happened in 2003 and 1999, we could use the idea that the 906 is a crucial support level, and must not be violated.

Bollinger Bands:
For the whole week, KLCI was located above the middle band with the band width contracting until Thursday. On Thursday, Bollinger band width expanded 9%, followed by the Friday's opening of another 4%. This signal suggest more upside room for KLCI. We hope to see the Bollinger band width continue to expand gradually so that it could allocate more upside margin for the KLC. (Study A)

Volume:
Total market volume for the week stood at 22.26 million lots, a 30.9% increased from the previous week's volume. Looking back to the daily chart, market volume was rather promising on Thursday with the volume standing higher above the 40 days VMA. However, volume on Friday was rather disappointing for it was only trading at little over 4 million lots. Nevertheless, it is crucial to have volume above the 40 days VMA in order to support a possible rally for KLCI, or else, any attempted rally with thin volume would be a weak one. (Study B)

MACD:
On Monday, the MACD line crossed above the trigger and gave a buy signal. Mean while, after the crossing signal, the MACD line has been moving slowly higher indicating that the KLCI is moving to an upward direction. In addition, MACD histogram was also moving higher without any round top signal, therefore, it suggests that the KLCI is likely to continue its momentum. However, it pays to study the histogram for it would signal a technical correction when we see a round top signal. (Study C)

WinChart RSI:
Towards the end of this week, the WinChart RSI only started to make a move. At the moment, the WinChart RSI is located slight higher above the 50% level, still situated in the neutral zone, giving no signal to any direction for KLCI. However, if we see the RSI moving higher in the coming trading days, it will suggests the sentiment for KLCI is turning to bullish bias. (Study D)

Stochastic:
Since the %K of Stochastic is very sensitive indicator, it has now reached the 100% level, suggesting that the KLCI might be over bought. Still, %D is now located at around 77%, suggesting that the short-term market sentiment is bullish. Provided these two lines are staying above the 70% level, KLCI is likely to advance further. (Study E)

Momentum:
As indicated by an upward arrow, the Momentum has been moving steadily higher for this week, suggesting that the KLCI is having a healthy momentum. In order to maintain a healthy momentum, we must have the Momentum indicator moving in line with the KLCI is the KLCI were to start advancing in the coming trading days. (Study F)

In the Nut Shell:
With a positive signals from the Bolligner bands, MACD, and Stochastic, we expect the KLCI to be bullish. Further confirmation would be the WinChart RSI moving higher, increase of market volume, and continue opening of the Bollinger band width. Mean while, watch out for the 920 support, and the KLCI must not drop below the 10 days Bollinger middle band.

Copyright 1997-2005 Straits Index (M) Sdn. Bhd.