Market Outlook as at April 15

The KLCI gained 17.52 points to reach 1261.72 as at 11.02 am. At this mark, the KLCI has just broken to the upside of its downtrend line resistance at the 1260 level. This breakout could signal the beginning of the uptrend in the market.

For a convincing breakout & recovery, we need to see the following:

1. the KLCI closing above the 1260 level at the end of the day;
2. an expansion in market volume [You can see that the previous uptrend in September 2007 was also accompanied by an expansion in volume (see the pink & blue lines)]; and
3. the 10-day SMA crossing above the 20-day SMA.
   

The immediate resistance after this breakout will be the 1277-80 level, where the market gapped down on March 10th. Do not be distracted by this resistance, unless you are a trader. Stay with the market if the above conditions prevailed. Nevertheless, you need to be cautious & avoid over-exposure given the present domestic political uncertainties & external economic turbulence.


Chart: KLCIs daily chart as at April 15, 2008 (courtesy of Quickcharts)