FBM KLCI - Buy SUPERMAX

The FBM KLCI rose 1.08 points to close at 1,333.97. Its resistance areas at 1,335 and 1,350 will cap market gains, whilst the obvious support areas for the FBM KLCI are located at 1,315 and 1,333. Due to the Dow’s major overnight rise of 404.71 points, we expect the FBM KLCI to gap up initially to be followed by some profit taking activities later today. 

We believe that the FBM KLCI was supported by local funds and might be resilient amidst global adversity. The bearish divergent signals suggest that the FBM  KLCI had stalled at 1,349.92.

Short-term intra-day trading or scalping the market would be the best market strategy. For now, we believe that the market will be very volatile and wild. Therefore, trade with a very short-term horizon. In the longer term, we  believe that the FBM KLCI has peaked at 1,349.92 (near the 75% retracement level measured from its 1,524.69 high to its low of 801.27). The risk-reward ratio is high (for risk) and low (for reward). Therefore, investors should resort to intra-day trading only or invest with a 1 to 2-day time frame. Some stocks that we like are:  CSCENIC, JOHAN, PACMAS and YEELEE.

FBM KLCI: Key Points
  SUPERMX – Rebounded from RM6.19 target
  FBM KLCI – Top formed at 1,349.92
  Obvious supports are at 1,315 & 1,333
  Firm resistances seen at 1,335 & 1,350

by Maybank IB