FBM KLCI Bullish Breakout Suggests Further Upside Ahead

The local stock market extended rally for the second day of the year, boosted further by gains in regional markets as more investors returned from the year-end holidays to participate.  The FBM KLCI surged from opening low of 1,278.26 to a near 20-month high of 1,290.55, then closed at 1,288.24 to gain 12.49 points or 1% for the day, as 658 gainers led 184 losers on strong trading volume totaling 1.86bn shares worth almost RM2bn.

Rally to Stall at 1,300/1,305 on Profit-Taking
The surprisingly sharp rally in the past  two days was backed by robust follow-through buying momentum, representing a bullish breakout which promises further significant upside ahead.  However, for the immediate term, recent strong stock price gains should see keen profit-taking and selling stalling their rise as technical momentum becomes overbought, especially towards KLCI resistance at the 1,300 psychological level and the 29 April 2008 pivot high of 1,305.  Immediate support is revised higher to yesterday’s low of 1,278, with gap-up support at 1,275 which mirror the 23.6%FR Fibonacci Retracement (FR) of the upswing from the 1,233 pivot low of 2 November to the 17 November high of 1,288.  Stronger retracement supports are at 1,267 and 1,260, the respective 38.2%FR and 50%FR levels.

Revert to Sell on Rally Axiata, TM, Sime Darby & IOI Corp
Revert to Sell on Rally Axiata and TM toward revised higher upside targets of RM3.20, and also Sime Darby and IOI Corp as short-term technical  momentum will turn overbought. Further rally on lower liner  construction stocks MRCB and Zelan to RM1.60 and 80sen respectively will also see overbought condition and hence keen profit-taking interest.  On the other hand, rotational play could shift into the oil & gas sector, with laggards such as Kencana and SapuraCrest likely to attract bargain hunters.


source: TA securities

Popular posts from this blog

Malaysia Inflation to start easing end-3Q or early 4Q2011

Image
Malaysia Inflation Rose To The Fastest Pace.
Inflation is still a major concern and we expect the upward pressure to stay in 3Q2011 coming from food & non-alcoholic and clothing/footwear in  view of the festive seasons. Impact from June’s electricity tariff hike is expected to continue. But the  upward inflation pressure can be contained from stronger RM/USD and high base comparison. Nonetheless, we expect inflation to start easing by end 3Q2011 or early 4Q2011. Meanwhile, with global uncertainties flared by euro debt crisis and slower US economic recovery lingering, it has forced AxJ policymakers to focus on growth as opposed to inflation. Rates hikes could be reaching its tail end. We expect BNM to accommodate further erosion in real returns by holding OPR at 3.00% to focus on growth. But possibilities for another 25bps hike in OPR remains, as it depends on inflation outlook. Likewise SRR hike will depend on liquidity inflow. If that happen, we expect another 50bps to 100bp…
Read more

Trump’s Win – Bark Worse Than Bite?

Image
While Asian equity markets may remain soft after the surprise of Donald Trump’s win in the US presidential election, we look forward to buying opportunities. Essentially, we do not expect significant economic repercussions on Malaysia’s economy or corporate earnings, save for the indirect impact on downward biases for the ringgit vs the US dollar and on interest rates. We highlight the trough prices of our conviction picks, as well as some buying opportunities.

WHAT’S NEW
• Near-term confidence pricked. Asian equity markets have swooned on knee-jerk reactions to Trump’s surprise win; the FBMKLCI eased 1%. Despite the major turnaround in US equities after Trump’s acceptance speech which promoted national unity and stressed on fiscal stimulus (the DJI futures initially fell by as much as 800 pts before the cash DJI remarkably recovered to positive territory), investment sentiment in Asia may remain damp and to be swayed by Trump’s anti-globalisation rhetoric. Nevertheless, we do not …
Read more

FBM KLCI Technical Outlook

Image
Stocks on Bursa Malaysia snapped a three-day losing streak to end higher last Friday on bargain hunting in selected heavyweights, which saw late fund buying of Tanaga Nasional and Malayan Banking. Bargain hunting by institutional funds supported the local market but further gains were limited by fears of a better-than-expected US third-quarter gross domestic product data which will be out later of the day. Asian stock markets were mixed as they were still affected by a flurry of major corporate earnings reports across the region and the declining oil prices. The ringgit weakened further against the US dollar at 4.1970/1020 from the 4.1810/1900 recorded on Thursday, tracking the performance of emerging Asian currencies. At close, the FBM KLCI settled at 1,670.27, up 1.24 points or 0.07%, from Thursday’s close of 1,669.03, after opening 0.58 of a point higher at 1,669.61 and moved between 1,666.97 and 1,671.72 throughout the day. On a weekly basis, the benchmark index gained 0.29 of a p…
Read more