FBM KLCI: Downside volatility may emerge
Weaker supports of 1,452 & 1,470 1,476 & 1,494 will cap the rebounds
PCHEM – Sell this stock on rallies
Market Review
The FBM KLCI dipped marginally by 0.38-points to end at 1,476.84 yesterday. The FBM100 rose by 0.69 points but the FBMEMAS fell by 0.49 points respectively. Market breadth had a gainer-to-loser ratio of 322 to 462 while 286 counters were unchanged. Market volume traded was 2.03b shares - valued at RM1.47b.
Regional Markets
Asian stocks fell for a second day after Italian bond yields rose amid concern Italy’s new government will struggle to trim its debt and keep Europe’s crisis from spreading.
US Markets
US markets ended much lower last night, after Fitch stated that the American banking outlook could worsen from its stable condition if the EUROZONE’s debt problems are not resolved quickly. The Dow tumbled 190.57 points or 1.58% to 11,905.59, the S&P500 fell 20.90 points, or 1.66% to 1,236.91 and the NASDAQ lost 46.59 points or 1.73% to 2,639.61. Brent crude declined USD1.49 to close at USD111.08.
Daily Technical Outlook
The FBM KLCI declined by 0.38-points to close at 1,476.84 yesterday. Its resistance areas of 1,476 and 1,494 will cap market gains, whilst the weaker support areas may be located at 1,452 and 1,470.
The FBM KLCI’s previous key swing levels were: 1,576.95 (high), 1,474.38 (low), 1,597.08 (high) and 1,310.53 (low). A temporary low was seen at 1,310.53 on 26 Sep 2011.
The market’s next key swing high on 31 October may be located at 1,493.28.
Due to the US markets’ very poor tone last night, we may see another downward day for the index. We advise clients to trade with a short-term time frame locally. It is unwise to join the recent penny stock activity (e.g. HARVEST with its suspension, designation and limit-down and SYF with its large cumulative 2 days’ price and percentage drop) as these stocks do not have any fundamentals and the companies are loss making. Sell these stocks swiftly if their trends turn down violently.
Some stocks we like are: ARMADA, CARLSBG, CUSCAPI, GENTING, PROTON, SOP, SUNWAY, TDM and UEMLAND.
by Maybank Investment Research 17 Nov 2011
