Kuala Lumpur Composite Index (KLCI): Strong down trend

Once again, the KLCI easily broke the immediate support of 950 points and plunged to its lowest low since June 2004 at 801 points before rebounding immediately. Despite this, the Malaysian market was less volatile than other equity markets. The government has repeatedly given assurance that the Malaysian financial market exposure to the current financial crisis is minimal but investors are still concerned. Inflation has not really declined despite lower commodity prices and weaker currency adds more weight to the concern.

The down trend remains resilient and the currently the KLCI level is way below the average at 863.61 points while the short term 30-day average is at 950 points. Momentum indicators are indicating that the down trend momentum is strong and therefore the KLCI may decline further. If the KLCI goes lower than the 801 points low, it may find the next major support level at 600 points. The current immediate resistance is 950 points and is the KLCI is able to break and stay above this resistance level, a sideway correction is expected.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.