NEXT For KLCI ... Market Oversold, Short Term Rebound !!

The market continued to stay in its bearish mode. The selling pressure remained as the volume was firm but the index was declining. The KLCI is strongly bearish as the short term 30 day MA has fallen below the long term 200 day MA. The last time this happened was in 2011 where the index fell 16% in two months from the then historical high. So far, the index has fallen only about 5% from the historical high and 16% from the current historical high is roughly at about 1600 points.

Momentum indicators like the RSI and Momentum Oscillator continue to indicate strong bearish momentum similar to the decline in 2011. Furthermore, the KLCI continues to trade below the bottom of band of the Bollinger Bands and this indicates strong bearish momentum.

However expect some technical rebounds because of the market being oversold in the short term…

The next technical support is at 1750 points based on a 50% Fibonacci retracement level of the uptrend that began in early 2013 and a 23.6% Fibonacci retracement from the uptrend that begain in late 2011.

Unless the index is able to climb above 1820 points support turned resistance level, expect the index to remain bearish.