Bursa Malaysia: Lower Liners to Sustain Rotational Interest
Stocks rebound on Thursday led by lower liners, encouraged by a regional rebound after US President Barack Obama called on Congress to pass tax cuts and spending to stimulate growth, but blue chips stalled on profit-taking and selling. Consequently, the FBM KLCI was down 1.26 points to settle at 1,264.51, off an opening high of 1,267.85 and low of 1,261.69 as gainers beat losers 534 to 190 on slower pace of 935.3mn shares worth RM1.43bn.
Stronger Support at 1,255, Then 1,248
Overnight losses on US and European markets sparked by concerns Greece may default could extend a correction in the region. Nevertheless, on the local market, given the weak buying momentum on blue chips, the index should aim for base building consolidation, but lower liners appear robust with healthy rotational plays to encourage retail participation. Immediate support is retained at 1,262, which mirror yesterday’s low and matching the 76.4% Fibonacci Retracement (FR) of the upswing from 1,248.58 low to the recent peak of 1,308.52. Stronger supports are at the December low of 1,255, then 1,248, and subsequently 1,233, the 2 November pivot low. Immediate resistance levels are at 1,278, 1,285 and 1,294, the respective 50%FR, 38.2%FR and 23.6%FR levels.
BUY 3A & RCE Capital for Breakout
As index heavyweight blue chips led by banks and plantation stocks consolidate due to profit-taking and selling resistance, investors could switch to focus on selective lower liners which are more attractive to bargain at support levels such as MRCB, UEM Land, Dialog and Kurnia Asia. Meantime, breakout rallies on 3A and RCE Capital could follow-through and attract buying momentum to reach revised upside targets of RM2.30/2.50 and 80sen/85sen in the immediate term.
source: TA securities