Sunday, September 25, 2011

KLCI May Has Potential Relief Rally Amid Oversold Positions

Bursa Recap: FBM KLCI plunges 2.2% to 1388
Asian stocks on Friday saw further losses amid global equity sell-off but finished off their intraday lows, boosted slightly by the G20’s pledge to help stabilize Europe’s financial system.

After a 31.2-pt plunge last Thursday, FBM KLCI declined 21.9 points further to 1365.9 Friday to end 4.5% or 65 points lower wow. Lagging movers were MAYBANK (-41 sen to RM7.99), MISC (-34 sen to RM6.12), PBBANK (-16 sen to RM12.44), IOICORP (-2 sen to RM4.51) and GENTING (-19 sen to RM8.61).RM6.11) and AXIATA (+3 sen to RM4.69).

FBM KLCI Outlook: KLCI: Potential relief rally amid oversold indicators
The KLCI hit an intra-week high of 1434 on 19 September (our envisaged 10-d SMA resistance) but headed lower again to a weekly low of 1458 on 23 September before ending at 1465.9 points (our 23.6% FR support) last Friday.

Despite concerns of a possible double-dip recession in the U.S. and the lingering European debt crisis, speculation that European policy makers will announce steps to contain the debt crisis as foreign counterparts lobby for action will likely trigger potential relief rallies this week.

Overall, we continue advocate investors to capitalize on any rallies to trim their position. Alternatively, for risk-takers, adopt a short term trading oriented approach to take profit into any rebound (Please refer to overleaf tables for potential technical rebound plays).

Critical level to watch is the 1311 (23.6% FR). A breach below this level will push index to retest 1300 psychological support. In the wake of extremely oversold positions, potential technical rebound targets are 1386 (lower Bollinger band), 1400 and 1422 (10-d SMA).

Daily KLCI: Any Technical Rebound Due To Heavily Oversold Positions Will Likely To Be Shortlived Unless The 5-Days & 10-Days SMAs Resistance are Violated
FBM KLCI 26-09-2011

Weekly KLCI: No Signs Of Reversal Yet
FBM KLCI 26-09-2011a

Source: HLeBroking

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