KLCI Futures To Face Further Bearish Pressure

Published: 2009/03/16

THE Kuala Lumpur Composite Index (KLCI) futures March contract on Bursa Malaysia Derivatives Bhd closed lower at 840.5 with open interest of 22,791 contracts last week.
Entering a phase of deeper correction after breaking the 850 support line, the March contract may once again be put to the test this week.

It is difficult to see how the market direction can change in the near future. The retreat below the 850 support line also shows how real the threat of a raging bear market is.

The bears took a rest last Friday as the market found solace just below the 850 support line. Though selling pressure has eased, we may see less commitment from buyers. This is based on the signals which have not staged any meaningful recovery despite a strong catalyst last week.
Rejection of the high last week has also permitted bearish elements to seep back into the market, guising themselves each time the spot contract tries to recover.

With no firm rebound, it has be considered as a good shorting entry. As the technical oscillators turn lower under trading momentum, support lines may hold back prices from a straight forward decline.

This week, the spot contract may try to push ahead despite the bruised momentum. This may lead consolidation back into the market as the negative sentiments may continue to prevail. For this reason we see the spot contract remaining within the boundary of overhead resistance at 850 and support at 820.