KL COMPOSITE INDEX - PULLBACK EXPECTED BUT UP TREND STILL INTACT

It has been another month of uncertainty as the year ends and the KLCI traded in a tight trading range with a bullish bias as expected. The KLCI traded between 835 and 888 points, lower than the previous month’s trading range. KLCI closed at 876.75 points before the new year, and this level is very near to the monthly closes for the past two months. The KLCI came out of this trading range in the new year as the KLCI continues rally upwards and closed at 923.57 points on the 12th of January.

The KLCI is tested the long term 90-day moving average on the 7th of January at 936 points but unable to go above it. I wrote in my previous article that the KLCI may test 940 points. However, it is above the short and mid term 30 and 60 day moving average, which has started to move flat. This means that the KLCI is in a long term down trend correction. The convergence between the KLCI and the RSI indicator indicates that there is strong bullish momentum in the short term up trend.


Daily KLCI chart as at 12.24 PM (+8GMT), 13 January 2009 using NextVIEW Advisor. Click on chart for larger view.

With the strong momentum, the KLCI might be able to test the 940 points resistance level. In the mean time, expect a pull back to 870 points because KLCI is in a overbought level.

Short term target 960
Long term target 550

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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.

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