KLCI Technical Reading Summary

Technical  indicators  for  the  FBM  KLCI  have  turned  bullish  following  the  strong  windowdressing  surge  on  blue  chips  last  week,  with  a  fresh  daily  stochastics  buy  signal  and  daily MACD  poised  to  trigger  a  buy  supporting  further  upside  momentum.  However,  investors should be aware that window-dressing buying may peak on 31 December, hence profit-taking correction could follow in the first few trading days for 2014. As such, investors should look ahead to take profits on blue chips which will be overbought on further gains.

 

KLCI weekly technical analysis above: FBM KLCI Weekly chart  (click to enlarge)

As  for  the  index,  immediate  support  is  upgraded  to  the  rising  10-day  moving  average currently at 1,843, followed next by the 30-day moving average at 1,823, close to 1,822, the October  high  resistance-turn-support  level,  with  stronger  support  cushion  from  the  50-day
moving average now at 1,816 (see the Chart above ). The 100-day moving average at 1,790 acts as a strong support  buffer.  Immediate  resistance  will  now  come  from  1,880,  the  123.6%  Fibonacci Projection  (FP)  of  the  rally  from  1,597  low  of  February  to  the  May  high  of  1,826.  The subsequent hurdle would be 1,913, the 138.2%FP.

 

Stock-wise, we would recommend investors take profits on further window-dressing strength in  index  heavyweight  blue  chips  such  as  AMMB  Holdings,  Axiata,  CIMB,  Genting  Bhd, Maybank,  RHB  Capital,  Tenaga  and  TM  ahead  of  potential  year-end  profit-taking  correction
ahead.

 

by TA Securities

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