Blue Chips Correct while Oil & Gas Stocks Shine
BUY Muhibbah & TH Heavy
Banks led blue chips lower for extended correction Wednesday, dampened by overbought
conditions and uncertainties over the US Federal Reserve’s stimulus bias and government budget talks, but selective rotational buying interest on oil & gas stocks continued to highlight. The KLCI lost 8.42points to close at 1,784.06, off an early high of 1,791.18 and low of 1,783.15, as losers beat gainers 420 to 359 on higher trade totaling 2.21bn shares worth RM2.05bn.
Better Support at 1,772/1,768
The daily stochastics sell signal implies further correction potential for the index, likely towards 1,772, the 23.6% Fibonacci Retracement (FR) level of the 7/2/13 low of 1,597 to the all-time high of 1,826, and next at 1,768, the 50 and 100-day moving average levels, before stabilizing. A breakdown could see the previous 1,747-1,753 gap-up of 10 Sept being tested for support. Immediate resistance remains atlast Friday’s high of 1,805, with stronger hurdles at the July pivot high of 1,811, and subsequently the all-time high of 1,826.
BUY Muhibbah & TH Heavy
On the other hand, Muhibbah should extend gains on bullish technical momentum, with a
decisive breakout above RM2.72 (25/7/13 peak) to target RM3.00, RM3.17 (123.6%FP) and RM3.45 (138.2%FP) ahead, while key retracement supports are at RM2.26 (23.6%FR) and RM1.99 (38.2%FR), reinforced by the lower Bollinger band. Likewise, TH Heavy should challenge 96.5sen (19/7/13 peak) for breakout to target RM1.09, RM1.17 and RM1.24 going forward, while important chart supports are at 84sen (23.6%FR) and 76sen (38.2%FR).
Asia Remain Subdued on Budget Jittery
Asian shares turned in a lackluster performance on Wednesday, as concerns about a possible
U.S. government shutdown and uncertainty about the Federal Reserve's policy outlook made investors hesitant to push out of recent ranges. OnWall Street on Tuesday, U.S. stocks mostly ended lower, extending their slide to a fourth session, as fears are growing in Washington that political dysfunction might lead to a default next month if lawmakers don't authorize more borrowing. Japan's Nikkei share average eased for a second day on Wednesday morning on the back of weakness in Wall Street, butthe pullback was contained by a sharp jump in Tokyo Electron Ltd shares on news of a $7 billion-plus takeover of the tech company by Applied Materials Inc.
However, stocks in Sydney were a surprising standout on Wednesday, outperforming the rest of the region despite a fourth-straight session of losses on Wall Street. The S&P ASX 200 rose 0.9%, catching traders off guard as many had predicted cautious trade. High-end retailer David Jones Ltd was the biggest gainer on the ASX, jumping 6% following the company's full-year earnings report. Meanwhile, Hong Kong shares inched higher on Wednesday, as investors welcomed official confirmation of the Sept. 29 launch of Shanghai's free trade zone, seen as a test-bed for financial reforms. The Shanghai city government declined to comment further on the free trade zone at its regularly-scheduled weekly press conference on Wednesday morning, saying details "will be revealed at a relevant time”. The Hong Kong Index inched up by 30.59 points or 0.13% to 23,209.63 while the Singapore’s
Straits Times Index fell 3.17 points, or 0.10% to 3,208.58.
Wall Street Extend Losing Streak on Budget Impasse
U.S. stocks fell on Wednesday and the S&P 500 put in a fifth day of losses, its longest losing streak since the end of 2012, on jitters funding for the federal government would run out
and after a drop in shares of Wal-Mart Stores. Investors worried about two looming Washington deadlines, before Oct. 1 Congress needs to pass stop-gap funding for federal agencies and by Oct. 17 it must raise the federal borrowing limit to avoid a debt default by
the United States. The Senate took up the funding measure after Tea-Party-backed Republican Senator Ted Cruz held the bill up with a 21-hour-long attack against “Obamacare”. A government shutdown could begin withthe new fiscal year that begins on Oct. 1 unless funds are authorized.
Meanwhile, shares of Wal-Mart, the world's largest retailer, added to early afternoon losses on the Dow and S&P 500 after a report by Bloomberg News that Wal-Mart was cutting orders to its suppliers for this quarter and next. The stock retraced some of its losses after the company called the report inaccurate and ended down 1.5% at $74.65, among the biggest drags on the S&P 500 and Dow. However, a pair of better-than-expected economic reports helped stem losses. Durable-goods orders for August edged up 0.1% from July, despite expectations of a 0.6% drop. Sales of new homes rebounded by more than forecast in August, rising 7.9%, while economists expected a 6.6% increase. In corporate news, J.C. Penny shares slumped, extending a string of losses that has sent the company's stock to its lowest price since late 2000. Goldman Sachs Group fixed-income analysts said in a note late Tuesday that weakness in the retailer's business could challenge its liquidity levels. The Dow Jones Industrial Average eased 61.33 points, or 0.40% to 15,273.26 while the Standard & Poor's 500 Index lost 4.65 points or 0.27% to 1,692.77. The technology-heavy Nasdaq Composite Index inched slid 7.15 points, or 0.19% to 3,761.09, while the financial
index rose 1.43 points, or 0.53% to 271.32.
by TA Securities