KLCI: Higher Level of Investors Confidence

The equity market has been on a very bullish mode since March this year. The KLCI went as high as 1059.88 points before settling at 1,044.11 points at the end of May. The KLCI has increased about 24 percent since March. Investors were not taken aback by the weaker than expected quarterly GDP growth. The government announced a 6.2 percent contraction for the first quarter and revised the GDP forecast for the year 2009 to contract between 4 and 5 percent. The rally in KLCI is in tandem with the rally in the regional markets with most of these markets climbed more than 50 percent from the March low. However, trading volume has decreased for the last two weeks of May indicating a little uncertainty.

The KLCI broke and stayed above the psychological resistance level of 1,000 points and this indicates high level of investors’ confidence. The next resistance is at 1,080 points, the 38.2 percent Fibonacci retracement level from the long term bear trend since January 2008. With the current momentum, there is a high chance of price testing this level. To be able to go beyond this level requires more positive catalysts. Technical support level is 1,000 points, the previous resistance level.

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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.