From the Chartist’s Desk for You

The chartist is cautioning us to watch out for bear signals.

Indications:

Total volume last week dropped to 890 million shares from 970.87 million shares the week before. Daily average volume from the week dipped to 178.99 million shares from 194.18 million shares previously. The index, however, managed to move up 22.46 points or 1.66%

KLCI appears to have run out of steam after a technical rebound in the first three days before the sell-off on Thursday in Shanghai' where that market dropped 200 points or 5.25%.

The Challeneges:

Two strong technical hurdles pose a challenge to the market. One is at the 1,383.22 points formed last week and the other, the historic high at the 1,391.57 points established on June 22. The chartist in his learned experience, predicts that the bullish phase to can only re-emerge on condition the index enter into a period of congestion to build a solid base for the next spurt up.

His Technical readings indicate the next few weeks may be the most crucial period in 2007 for the KLCI.

Chartists see a major trend reversal pattern coming and caution all players to anticipate the bear. However, they view the near-term technical outlook as neutral and so there is that possibility of the index reaching its maximum probable price target above 1,400.00-1,435.00 points before the bull trend is completed.

In markets, time is the most vital factor. According to the chartist, when time is compressed, things tend to happen differently. In the event of a sudden big rush to sell, stock prices will react irrationally. Chartists can be fatalistic. According to them; when time is up, change is inevitable.

They expect minor correction in the near term with support around the 1,300.00-1,365.00 level.

Based on the weekly candlestick chart, a vital chart support is seen at the 1,360.00-1,355.00 points level. A breach of this support would send the index lower to re-test its most recent low around the 1,350.00-1,345.00 level. Immediate overhead resistance is seen higher at 1,385.00 to 1,390.00 points.

The weekly candlestick chart indicated that the index may adjust higher eventhough trading would be choppy in the immediate term.

So there you have it-the chartist’s crystal ball reading.

Heartsong