Market Outlook as at June 19, 2007

On June 6, I wrote that our market correction had most likely been completed. A good 2 weeks after that post, our market is still trading without clear direction. Is the market telling us anything new in the past 2 weeks? From the chart below, we can observe the following:

1. Higher 'highs' for the past 2 months;
2. Increased volume in the past 1 month;
3. Volume Oscillator has done a positive crossover;
4. Stochastic RSI has gone into overbought territory (a positive sign);
5. The sloping resistance line (in blue) is still blocking advances (currently, at 1380);
6. MACD has yet to do a positive crossover; and
   
7. While the 10-d SMA has crossover the 20-d SMA, the 20-d SMA is still threatening to crossunder the 30-d SMA.
   

Chart: KLCI's daily chart as at June 19 (courtesy of Tradesignum.com)

In my opinion, if the KLCI can surpass the 1380-90 level with good volume (say, 1.5-2.0 billion units), our market's uptrend would continue. It is possible that this breakout might happen within the next week or so. Watch out for this.