KL COMPOSITE INDEX TO STAY SIDEWAYS

In the past one month, the KLCI was up for two weeks and down for two weeks at the trading range between 866 and 937 points. In my previous article, I have expecged a pullback on the KLCI when it was 915 points. Resistance is at 940 points and the KLCI went as high as 936.63 in the first week of January before declining to close at 883.16 today. The KLCI is up 16 points on month. Negative financial and economic news locally and abroad has forced the government to take drastic actions such as lowering borrowing rates, planning for a second economic stimulus package and restricting intake of foreign workers. Investors are still split over their decisions.


Daily KLCI chart as at 30 January 2009 using NextVIEW Advisor. Click on chart for larger view.

The short term trend is up as the 30-day moving average is increasing. However, the KLCI is now slightly below this average. The long term trend is still down as the 90-day moving average is still declining. The KLCI movement for the past three months has formed a wedge chart pattern which indicates a correction in the long term down trend. The KLCI may still inch upwards as there is still strength left in the current short term up trend but because of strong resistance, the KLCI may not be able to rally and may just continue to stay sideways. Support and resistance levels remain at 800 and 940 points respectively.

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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.