KL Composite Index: Technical Rebound Expected

Monday 7 July 2008. Negative sentiments from rising inflation to the comical political instability have taken toll into the stock market. The KLCI fell about 1200 points or 9% in 2 weeks. The KLCI easily broke the 1,200 points support level and it is now at 1134.14. The aggressive downward movement has caused technical indicators to show that the down trend has turned strong. The average prices is currently between 1,190 points and 1,250 points.

This means that the KLCI is oversold and this is also indicated on the Stochastic and RSI indicators. The daily price movement on Friday suggests a price reversal. Therefore, a technical rebound is expected, IF there are no negative follow ups to the current problems that causes negative sentiments. Support level is at 1,100 points while immediate resistance is at 1,190 points. In the long term, the KLCI is expected to continue to its down trend to the major support level at 1,000 points. By Benny Lee