Kuala Lumpur Composite Index Analysis - at crucial support level

The Malaysian equity market was in a bearish mode in the past two weeks. The Kuala Lumpur Composite Index (KLCI) is currently at a crucial support level of 1,090 points. As at 15th August 2008, the KLCI closed at 1,095.05 points. Previously I mentioned that the rally in mid of July last month was likely going to be a dead cat bounce, and indeed the cat was dead.

Trend is still strong downwards and momentum in the down trend has started to get stronger as well. The Relative Strength indicator has started to make new lows in the hourly chart and this indicates that the momentum was strong downwards. This suggests that there is a high chance of KLCI testing and breaking the crucial support level and if this happens, we may see the KLCI sent to a level we have not seen since two years ago.

The next support level is between 930 to 950 points, which is my long term target. This target was established in January through the Malaysian Smart Investor magazine where I am a regular contributor since year 2004. The main resistance level is at 1,180 points while the immediate (and weak) resistance is at 1,120 points.

Despite news that commodities and crude oil prices may decline further, it did not affect the Malaysian market because Malaysia is one of the leading producers in these two commodities.


Weekly KLCI chart as at 15 August 2008 using NextVIEW Advisor

Analysis and Commentary by Benny Lee