Monday, July 4, 2011

FBM KLCI May Hit 1590-1600 Points Before A Brief Pullback

Bursa Recap: A healthy start in 2H
Asian markets extended their rallies, thanks to a better-than-expected measure of June Chicago PMI and approval of a bailout plan by Greece's parliament. However, early gains were reduced as weaker-than-expected China June PMI data of 50.9 (May: 52) prompted profit-taking.

The FBM KLCI gained 3.9 points to another new high of 1582.9 (+1.2% wow) amid buying of certain index-linked stocks. But market breadth was tepid as losers edged gainers by 388 to 352 as trading volume eased 15% to 802 million shares worth RM1.4 billion.

FBM KLCI outlook: May hit 1590-1600 points before a brief pullback
The FBM KLCI rallied from intraweek low of 1560 on 27 June to close at all time high of 1582.9 (our envisaged 1590-1600 points upside target), eclipsing previous high of 1577 (6 Jan) amid midyear window-dressing and rebounds on overseas markets.

Technically, RSI and MACD indicators (weekly and daily) are trending up, suggesting more gains in the pipeline, but the weekly and daily Stochastics indicators are signaling growing overbought conditions.

Overall, the KLCI is expected to continue its rally towards 1590-1600 points during the early part of this week but could face healthy profit taking later, prior to the Bearish 2.0 rally on 9 July. Weekly supports are situated around 1568 (10-d SMA), 1561 (mid Bollinger band) and 1556 (30-d SMA).

Daily KLCI Shows Upside Bias Despite Overbought Slow Stochastics
FBM KLCI 04-07-2011

Weekly KLCI May Retest Long Term Up-Trend-Line (UTL) Support Around 1620-1630 Points
FBM KLCI 04-07-2011a

Source: HLeBroking

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