Technical rebound

Last week, our KLCI gained 69.35 points week-on-week to close at 1258.41. Volume has begun to pick up to the level of 900 million shares. Technically speaking, the run up of the KLCI is only a technical rebound or correction to the sell down two weeks ago. CI has been artificially push up at the last minute on Thursday and Friday to close high, which is not a very healthy sign.

For the coming week, KLCI may challenge the resistance at 1280 points to close the gap, however, profit taking activities and external factors may cause the CI to correct downward first. CI may find support at 1230 and 1205 levels.

On the broad picture, KLCI must break 1280 and stay above it in order to turn strong in the short term. On the medium term it is still weak, KLCI may go sideway and trade in a consolidation range of 1200 -1300 before it resume its uptrend. A good example is to take a look at how the DJIA consolidate in the last 2 months, that may probably give us a clue to how our KLCI will consolidate.

This is a good opportunity to pick up fundamentally sound stocks, as most of them had already corrected substantially from their peak.