Daily and weekly momentum indicators for the KLCI are flashing initial overbought signals following last week's rise, but strengthening trend indicators should offset the overbought technical condition and support further gains in the immediate term. As such, investors can expect further upside this week, with daily trading volume sustaining above the one billion shares mark to strengthen bullish momentum. Improving sentiment on global markets due to strengthening economic numbers will also support upside momentum this week.
As for the KLCI, last Friday's bullish breakout above the 1,334 peak of 11 March will fuel upside toward the next upside target of 1,354, which represent the 76.4%FR of the tumble from 1,525 all-time high to the 801 low. Looking ahead, a decisive breakout above this level will target 1,380 next, and then 1,392, which mirror the 24 July 2007 pivot high.
On the downside, immediate support cushion is revised upwards to 1,319, with 1,308 and 1,300 acting as stronger support platforms.
Nonetheless, given the strong gains enjoyed by CIMB, Supermax, MRCB and UEM Land amidst increasingly overbought technical readings, we recommend investors look to sell on further rally or take profit at higher upside targets prior to profit-taking correction ahead. Note that stocks with 14-day RSI approaching 90 generally indicate a peaking rally, meaning that gains will be tough to sustain in the immediate term.
source: TA securities
A3T2HNFD8M8H
