The local stock market fell on Monday in sympathy with heavier regional losses led by a 5% tumble in the Shanghai Composite Index on concern over China’s property bubble and steps needed to cut budget deficits in Europe will damp global growth. The FBM KLCI lost 5 points to settle at 1,334.27, off an opening high of 1,337.30 and low of 1,326.96, as losers trashed gainers 557 to 187 on slower turnover of 633.1mn shares worth RM1bn.
Maintain Sell Rally Toward 1,349/1,354 While the reversal from a sharp fall on overnight US stocks due to a rebound on the euro from a four-year low should encourage a rebound in regional markets and hence locally, the anticipated weaker buying momentum should cap upside as sentiment remain cautious given the persistent external market volatility. Maintain
view to sell on rally toward immediate resistance at 1,349 and upside target at 1,354, the 76.4%FR of the 1,525 to 801 sell-off, and only re-enter the market near key Fibonacci Retracement (FR) supports, specifically at 1,320, representing the 23.6%FR and 50%FR of the rise from 1,224 low of 9 February and 1,292 low of 22 March to the 26-month high of 1,349.9. The lower support zone at 1,309 to 1,300 will act as stronger downside buffer.
Buy on Dip IOI Corp & Sime Darby for Rebound
Since IOI Corp and Sime Darby are oversold with 14-day RSI below 30 and share price closing below the lower Bollinger band, investors should look to buy on dip toward RM5.20/5.00 and RM8.10/7.80 respectively to maximize leverage on a rebound ahead. Meantime, switch to Buy on Dip rubber glove makers Adventa, Latexx and Supermax on further weakness towards the lower Bollinger band for rebound profits.
by TA securities
