Sharp corrections in the region on Tuesday led by China and Hong Kong n concern China will act to further cool the overheating domestic conomy dragged the local market lower. The FBM KLCI suffered its sarpest fall since August last year, losing 13.77 points to close at 1,283.02, off a low of 1,278.1, on very negative breadth as 708 losers warmed 152 gainers on total volume of 1.25bn shares worth RM1.65bn.
The softer overnight close on US stocks despite better-than-expected earnings and consumer confidence could dampen regional sentiment in the near-term. Nonetheless, we note during yesterday’s correction blue chips and lower liners saw good bargain hunting support cushioning downside, hence any further correction is likely to be shallow. Immediate
support for the index will be at 1,278, yesterday’s low matching the important 50-day moving average and the 50% Fibonacci Retracement (FR) of the upswing from 1,248.58 low to the recent peak of 1,308.52. Stronger retracement supports are at 1,271 and 1,262, the respective 61.8%FR and 76.4%FR levels. Immediate resistance is revised lower to
1,294, the 23.6%FR, then 1,300 and the recent peak of 1,308.
Investors should be ready to Buy on Dip Axiata, Gamuda, Genting Bhd, Public Bank, RHB Capital and TM toward their respective immediate supports for rebound ahead, while lower liners Kinsteel, MRCB, Dialog and Kencana are more attractive to buy as they are trading near support levels. As for today’s trading picks, rubber glove makers IRCB and Latexx are also attractive to Buy on Dip toward their respective immediate supports of RM1.30/1.20 and RM3.60 for technical rebound upside. -TA securities Research
