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TwitterToday, the KLCI opened two points lower and was weak through the morning and as at 12.30 noon, the KLCI closed at 1084.15 points. Investors were cautious and at the same time worried as the by-election in the Permatang Pauh Parliament seat is going to be held on 26th August, a date which was declared as a state holiday in Penang.
The by-election is seen to be a very important point of time in the history of Malaysian politics because the results will see whether former Deputy Prime Minister Dato Seri Anwar Ibrahim will be coming back to parliament and act as the de-facto opposition leader. Anwar's return will cause uneasiness in the ruling goverment because he (Anwar) is confident that he will be able to form a new government come 16 September. By the way, in case you do not know, Anwar was recently charged with sodomy, a charge which brought his downfall in politics many years ago.So, the current political affairs are much more interesting than the stock market.
Last week, the KLCI action has formed a bullish reversal candlestick chart pattern called the hammer. The hammer pattern however is a weak one because of weak volume and black body. The bullish reversal can only be confirmed if the KLCI breaks above 1106 points. This is also a crucial level because this level is currently the down trend line resistance level as well.
Daily KLCI chart as at 12.30 noon, 25 August 2008 using NextView Advisor
If the bullish reversal is confirmed, only a small rally is expected because there is a strong resistance at 1160 points. Current support level is 1060 points, where the KLCI rebounded of last week. This is not a strong support level. The stronger support level is at 1030 points (a cluster of Fibonacci retracement levels).
Commentary and Analysis by Benny Lee
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