KLCI - Profit-Taking on Mild Overbought Condition

Sell on Strength Gamuda & Public Bank

The local market sustained recovery on Wednesday, buoyed by regional gains after the US Dow Jones average closed at a new record high overnight on speculation global central banks will maintain stimulus measures to boost economic growth. The KLCI added 9.76 points to settle at 1,651.84, off an opening low of1,641.29 and high of 1,652.84, as gainers trumped losers 501 to 231 on improving trade totaling 1.13bn shares worth RM1.74bn.

Resistance at 1,658, Next at 1,679
Stocks are likely to gain further strength today, given the recovering buying momentum and positive market breadth, but profit-taking and selling could increase due to mild overbought conditions. Immediate overhead resistance is now at1,658, the 23.6%FR  of the 1,526 low of May 2012 to the 1,699 record high of Jan 2013, with1,679, the 29 Oct high, acting as the next significant hurdle. Immediate support is maintainedat 1,629, the 200-day moving average, followed by 1,613, the 50%FR, with 1,599 and 1,592,the 61.8%FR, acting as stronger support platforms.

Sell on Strength Gamuda & Public Bank
Overbought momentum on RSI and slow stochastics should check gains from the recent breakout rally on Gamuda, with resistance at RM4.12(123.6%FP) and RM4.31 (138.2%FP) stalling immediate upside potential. Support on a profit-taking correction is seen at RM3.81 (100%FR). Similarly, Public Bank should attract selling on strength towards RM16.50 to RM17.00 and RM17.30 (123.6%FP), while immediate supports are at the 50-day ma (RM15.75) and lower Bollinger band (RM15.30).


by TA Securities

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