19 May18-May KLCI Index, 1530 point is Not the Support

18-May KLCI Index, Looking for Support

Date: 18-May-2012

Malaysia KLCI Index: 1532 point

 

Malaysia KLCI Index Overview

This week, Malaysia KLCI index close at 1532 point.  Investor may not see the impact until they recognize weekly lower by -3.3% for this week.  For the pass 6 months, there is no any single week closing more than -3.3%.

The 3 black candlestick since Monday to Wednesday had given a shock to the region investor.  We read much news about the crisis from Greek may be affecting the economy, and it also affects the investor sentimental.  We agree the effect from Europe or Greek crisis; we also recognize the slow down signal from the local industry however we do not agree the moving down for KLCI index is mainly because of Greek crisis.

As a mature investor, we should have our own judgment skill to determine the stock performance.  A discipline investor will has their own trading strategy and stock analysis procedure that act as a guideline for them making consistently profit along their investment journey.  This set of trading strategy should alarm the investor about the risk potential that they are facing.

From our previous few technical analysis reports, we already voiced out the KLCI index is already showing a weakening signal.  Moreover, from our stock analysis procedure, it also showed KLCI index already making a turning down trend.

Below trend chart is Malaysia KLCI index trend chart on 18/May.

Moving Average

Moving Average has been given a major position in stock analysis procedure and crossover trading strategy for moving average trend line is what we always emphasize.

From out technical analysis course, we emphasize on cross over trading strategy within 20D and 60D moving average trend line.

Let us look at latest KLCI index, we notice that the 20D and 60D moving average trend line already Dead Crossover on mid May, the Dead Crossover also the reason that causing the severe drop on KLCI index.

From set of moving average trend line, we could conclude that 120D moving average is moving up and against with other moving average trend line.  Even though the KLCI index still having the support from long term trend line, unfortunately the mid and mid-long term trend lines are moving downward.  This further reveal the KLCI index should move downward to look for lower support.

Volume Analysis

We are continuing see the shrinking in daily transaction; this has also leaded to the moving downward on volume trend line.

Shrinking in daily transaction may have difference interpretation as compare with moving upward trend.  During a downward trend, a shrinking in volume is leading the lower index.

Stochastic & MACD Indicator

Even the Stochastic indicator is at <20% area, this reveals the KLCI index currently locates at a week position.

Malaysia KLCI Index Summary

During last week, we already mentioned the index may come to 1530 points, and now it is the level.  From the moving average, we are see the index will move side way and waiting the moving down on 20D moving average, once the 20D-MA is approaching 120D-MA, there will be another round of moving downward slash that pushing the index to next lower level.

As of now, we are very sure 1530 points definitely is not the support region, the index will search for the support on 1489 points.

Malaysia KLCI Index Trading Strategy

Unless you are the risk taker, currently investor should keep away from KLCI index.  Meanwhile, don’t predict the support or turn over point.  Wait until the index gives us the signal for making a turning.

As of now, stay away from KLCI index will be our main trading strategy.