Bursa Malaysia - Sentiment Damper From Potential Fed Tapering


Blue chips fell into profit-taking correction mode on Monday, but lower liners and smalls cap stocks  continued  to  attract  strong  rotational  trading  interest.  The  KLCI  lost  9.88  points  to end at 1,778.36, off an early low of 1,771.65 and high of 1,788.43, as losers beat gainers 515 to  339  on  extremely  heavy  trade  of  3.15bn  shares  worth  RM2.44bn,  with  trading  on  MAS consisting nearly a third of the total volume.

Support at 1,772, Next at 1,756
The weak technical picture on the blue-chip index, clouded further by external weakness due to  potential  tapering  of  bond  purchases  by  the  US  Federal  Reserve  next  month,  should dampen  near-term  sentiment.  Immediate  support  stays at  1,772,  the  23.6%  Fibonacci Retracement  (FP)  of  the  7/2/13  low  of  1,597  to  the  all-time  high  of  1,826,  with  stronger supports  coming  in  at  1,756,  the  rising  100-day  moving  average  level,  and  1,738,  the 38.2%FR level. The 25 June low of 1,723 would act as an important pivot support. Immediate resistance  remains  at  the  1,800  psychological  level,  with  next  hurdle  at  1,814,  the  150% Fibonacci Projection (FP) of the 1,526 pivot low of18 May 2012 to this year’s 30 April high of 1,718. The next resistance would be at the all-time high of 1,826 of 6 May.

AMMB  could  decline  further  on  bearish  momentum,  with  breakdown  below  the  lower Bollinger band to re-test RM7.60 (76.4%FR) support,while RM7.28 (61.8%FR) would act as stronger  retracement  support.  Resistance  is  at  RM8.12,  the  15/8/13  high.  Similarly,  RHB
Capital  may  slide  further  to  test  RM7.85  (76.4%FR)  support,  while  a  breakdown  would challenge  lower  chart  supports  at  RM7.70,  RM7.55  and  RM7.40  going  forward.  Significant
resistance is likely at RM8.44, the 61.8%FR.

Asian Stocks Subdued Before Fed’s Policy Meeting

Asian  stocks  mostly  wavered  between  gains  and  losses  Monday  ahead  of  U.S.  Federal Reserve minutes to be released Wednesday that may give further clues on when the central bank might cut back on its easy monetary policy. The subdued start to trading in Asia comes amid  ongoing  speculation  over  when  the  U.S.  Federal Reserve  will  begin  to  wind  down  its $85 billion-a-month bond buying program. Many observers expect the central bank to make a decision on the program at a key meeting of Federal Reserve policy makers next month. Japan's Nikkei share average rose on Monday as investors found buying opportunities in oil companies on rising oil futures, but trading was subdued as the market was focused on the inutes of the U.S. Federal Reserve's July policy meeting this week for more cues on when it will  likely start tapering the stimulus. Meanwhile,Hong Kong and China shares slipped, as Chinese developers fell due to renewed concerns Beijing may take further steps to cool the market after Beijing and Shanghai's July home prices posted their fastest annual growth this year. The Hong Kong Index inched down by 54.11 points or 0.24% to 22,463.70 while the Singapore’s Straits Times Index lost 24.20 points or 0.76% to 3,173.33.


by TA Securities

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