FBM KLCI - Blue Chips Pause for Profit-Taking as Lower Liners Shine


Bursa Malaysia shares rallied a third day on firm buying interest, but gains were tempered by profit-taking, while rubber glove makers dominated the top gainers list due to the positive earnings outlook.  The FBM KLCI rose from early low of 1,288.02 to peak at a near 20-month high of 1,296.44 prior to closing at 1,293.17 to gain 4.93 points for the day, as 452 gainers led 299 losers on slower trade totaling 1.66bn shares worth RM1.81bn.

Resistance at 1,300/1,305, Support at 1,288/1,275
As gains on index heavyweight blue chips in the past three-day rally has been quite considerable, they should pause for profit-taking, especially as the index reaches the
1,300 psychological level and the 29 April 2008 pivot high of 1,305.  Immediate support is revised higher to yesterday’s low of 1,288, with gap-up support at 1,275 and stronger retracement supports at 1,267 and 1,260 cushioning downside. Meantime, keen retail participation and robust trading momentum should sustain on the lower liner space to fuel rotational plays.

BUY 3A, Jaks, KHSB and KPS for Bullish Breakouts
Reiterate Sell on Rally CIMB, Maybank, Public Bank and Sime Darby toward their immediate upside targets ahead of profit-taking correction, and switch to bargain oil & gas counters such as Kencana and Scomi Group as their recent rights and bonus issues would boost trading liquidity.  Meantime, buying interest could rotate to other lower liners such as 3A, Jaks, KHSB and KPS as they are on the verge of breaking out from congestion chart patterns.

- TA securities

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