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FBM KLCI : Sell On Rally CIMB, Maybank, Telekom

Local stocks extended gains a fifth day on Thursday in line with regional markets which climbed on higher technology earnings and as concerns over the Euro-zone debt crisis eased.  The FBM KLCI added another 2.82 points to close at 1,346.92, off an early low of 1,344.27 and high of 1,348.09 on improving market breadth as gainers led losers 396 to 253 on better trade totaling 905.8mn shares worth RM1.04bn.

Break Above 1,349 to Test 1,354, Next Hurdle at 1,380
The better-than-expected 1Q GDP numbers and OPR rate hike by Bank Negara should provide a lift to banks and hence the KLCI, but the substantially higher-than-anticipated near RM1bn provisions by Sime Darby could cap gains today.  Immediate resistance is retained at 1,349, the 4 May pivot high, with a breakout to test 1,354, the 76.4%FR of the 1,525 to 801 sell-down, and next upside hurdle at 1,380.  Immediate support remained at 1,337, matching the 30-day moving average, then 1,330 and next at 1,320, representing the 23.6%FR and 50%FR of the rise from 1,224 low of 9 February and 1,292 low of 22 March to the 26-month high of 1,349.9 last week.

 

Sell on Rally CIMB, Maybank & TM
Note that blue chips such as CIMB, Maybank and TM are breaking out of recent sideways congestion trade with share  price closing just above the upper Bollinger bands, signaling bullish breakout potential.  However, we are revising our call to Sell on Rally since technical momentum will become overbought at the later stage of a breakout, such as the 14-day RSI approaching 80 and higher, hence investors should look forward to take profit or sell on rally toward higher upside targets.

 

by TA Securities