For the week ended on the 16th of December 2005, the Composite Index pulled back from the recent break out, losing a total of 4.93 points to 893.37 points.

Main Chart:
As shown on the chart above, KLCI had a pulled back after last week's break out of the downtrend channel. For this week, KLCI was resisted by the 900 psychological resistance level and retreated. However, the KLCI rebounded precisely on T1 dynamic support line.

In addition, KLCI might be forming a new downtrend with the R1 as the new dynamic resistance line. Nonetheless, supports for KLCI is found at the 883 Fibonacci retracement level and T1, while the resistance will be at R1 and the important 900 psychological level. (Study A)

Bollinger Bands:
10 days Bollinger band width contracted 4% on Friday, suggesting that the direction for KLCI is unclear. However, the KLCI has broken below the middle marginally; therefore, the immediate outlook for KLCI has a slight negative bias.

Volume:
Total market volume for the week stood at 12.878 million lots, a 3.3% lower than last week's total market volume. On the daily chart's perspective, we could see that the total market volume for the entire week was below the 40 days VMA, giving no support to last week's break out. With the exception of Friday's volume which was at 3.11 million lots, which was partially contributed by the newly listed Star REIT (Real Estate Investment Trust) which has no direction co-relation to the performance of the KLCI. (Study B)

MACD:
Although the MACD line crossed the signal line last Friday, this bullish signal was soon weaken when we see the round top signal from the histogram. If the histogram continue moving lower, KLCI is likely to retreat further until the formation of the next round bottom on the histogram. (Study C)

WinChart RSI:
Regardless of the break out last week, WinChart RSI has been staying in the neutral region for about a month. At the moment, WinChart RSI suggests that the market sentiment for KLCI is at neutral with a slight negative bias. (Study D)

Stochastic:
%K of the Stochastic has dropped below the 70% level suggesting that the short-term bullish sentiment has over. Currently, the %D line remains mere above the 70% level, if the %D fails to hold up above the 70% level, it shall confirm the %K signal, and market sentiment for the short-term is expected to be neutral. (Study E)

In the Nut Shell:
KLCI is viewed as a pull back after the break out last week. KLCI must break above the R1 as well as the 900 hurdle in order to regain strength and investors confidence. If the support at T1 is violated, out look for KLCI continue to be bearish.

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