Tech Talk Bursa Malaysia WW36

Looking back at the previous week's tech talk.

1. RSI has high area of overbought signal which is greater than previous week WW34. Strong bullish activities. No swing test and no divergence signal. 40-50 support line still unbroken.
2. MACD also shows signal level of overbought which is higher than in mid March and mid April in which both resulted in some minor correction. KLCI not performing anywhere near centerline & no crossover expected.
3. Resistance set at 1430-1450 points while support level is at 1390-1370 points.

The KLCI broke the lower resistance barrier that I have set and settled down at 1435 aided by encouraging macroeconomic data from China and latest US data showing the world’s largest economy appearing not in great risk of falling back into recession.

Relative Strength Indicator (RSI)

Chart Setting: SMA 1, RSI (14, 20), Mar'10 to Sep'10

Still trending at overbought signal area but we see some profit taking activities towards the end of the week. No swing test and no divergence signal expected in coming week but do note that sellers dominated the trading floor on the last day.

Moving Average Convergence Divergence (MACD)

Chart Setting: EMA 12, EMA 26, MACD (26, 12, 9), Mar'10 to Sep'10

Now we start to see some signal of correction just like it did on mid March and mid April. KLCI not performing anywhere near centerline and thus crossover again is not expected for the coming week.

Resistance and Support Level

Chart Setting: Mar'10 to Sep'10 (6 months)

New resistance now set at 1450-1470 points while support level is now at 1410-1400 points (the KLCI psychological barrier).

In a Nutshell

Interestingly the market has been up for three consecutive weeks despite suggestions & my pessimistic views that valuation are expensive. I think many people see no reason to go against the tide apparently and this is common in the world where greed takes over logically thinking when times are good.

Once again I will say that it is about time the market consolidates and correct itself. Perhaps professional money will react in the coming week and short for profit taking to the expense of amateur greedy investors.