Monday, March 7, 2011

KLCI's Further Rally Towards Upper Bollinger Band This Week Is Possible

Last Friday, driven by a 1.6% rally on the Dow overnight and the positive regional marts, FBM KLCI jumped 1% to 1522.6 (+2.2% wow) amid strong gains on GENTING (+32 sen to RM10.34), IOICORP (+16 sen to RM5.73), MISC (+31 sen to RM8.07), SIME (+9 sen to RM9.17) and KLK (+60 sen to RM21.10).

Market breadth was positive with 674 gainers as compared to 148 losers, supported by 6% and 25% growth on trading volume and value to 1.13 billion shares valued at RM1.9 billion, respectively.

On the external front, barring any rapid surge in crude oil prices prior to the ‘Day of Rage’ protest in Saudi Arabia on March 11, the overall stronger-than-expected economic numbers globally from the developed and emerging markets should offset
concerns over surging oil prices, with increasing expectations the global economy would be able to sustain growth.

Locally, announcement pertaining to the Sarawak state elections could materialize amid BN’s convincing victories of two byelections in Merlimau and Kerdau yesterday.

All eyes will focus on the MPC meeting this Friday. Expect OPR to remain at 2.75% on the heels of January's lower-thanexpected exports growth, to accommodate domestic growth on the back of still-tame inflation.

Technically, indicators are on the mend and implying more upside potential in the pipeline, following the breakout above the DTL and mid Bollinger band last week. This bullish reversal pattern is likely to take the index further to retest 1526 (50% FR), 1538 (38.2% FR) and probably the 1541 points (upper Bollinger band) the next two weeks despite wild swings from the external front. However, the formation of the Hammer last Friday suggests that any surge is likely to remain volatile as investors
are likely to act quickly in taking profit. Support levels are situated around DTL of 1505, 1500 and 1482 (lower Bollinger band).

KLCI's Further Rally Towards Upper Bollinger Band This Week Is Possible Due To The Breakout Above The Down-Trend-Line(DTL) And Improving Technical Readings.
FBM KLCI 07-03-2011


Source: HLeBroking

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