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Technical Analysis - KLSE CI
your feedbackUpdated on Thursday March 30, 2000
see also statistics on klse ci's past ralliesTrendline studies
There is no sign yet that KLSE's bull market from 1/9/98 at about 260 has ended. Longterm upward trendline is still not broken to the downside yet. For information, STI (Singapore's Straits Times Index) has
broken its longterm upward trendline to the downside. STI is much bearish in longterm view, but in medium and short term view it could still be attractive enough for long position players. In view of the fact that KLSE market had in these few years always lagged behind leading Asian markets like Singapore, Hong Kong and Japan markets, it is worrying that KLSE may one day follow STI. This is warranted by fundamentals as the momentum of interest rates now is upward.Internet stocks may be not join this possible bearishness because firstly, internet stocks rely on capital market to raise fund more than bank loans or anything else, secondly world's number of internet users could be increasing at an accelerating rate and so are the level of innovativeness. More and
more companies see e-commerce as a neccessity rather than a choice and they just can't wait to jump into it.While major index had been a good reference for general market's movement, recently there had been a
great divergence of movement direction between technology/internet stocks and conventional stocks, e.g. Dow Jones had been showing weaknesses for more than a month but Nasdaq kept on recording new high. When is internet bubble going to burst?
Writer's own customised indicators
No rally is confirmed yet. KLSE CI closed above the greenline for two days and dipped below it again. It is safer not to assume any rally in place. Other cut loss points are 954 and 920. It is uncertain which way KLSE CI would take. In the most bearish situation, quick technical rebound support level could be around 915.
It is most risky to buy on strength when there is still no rally confirmed, with exception of some minority stocks.
Download auto-calculation spreadsheet programme incorporated with these indicators (about 950KB)
Theoretical discussion on these indicators
Chart pattern: head and shoulders (medium term)
For this pattern to be confirmed, neckline of 922 has to be broken to the downside, otherwise it would remain as an academic observation. If KLSE CI breaks previous high of 1013 to the upside, then this pattern will be cancelled altogether. In any case, remote or not, if 922 is broken to the downside which confirms this pattern, its downside target is about 830.
Chart pattern: Triangle (Agressive view: HIGH margin of error)
Breaking above the green line constitutes a medium term buy whereas breaking below the red line constitutes a medium (or probably longterm) sell.
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