Sunday, October 9, 2011

KLCI: Profit Taking Consolidation Likely To Be Well-Cushioned

Bursa Recap: KLCI records its 3rd straight gains to end +0.9% wow
Asian markets were generally higher amid improved hopes that European officials will get a handle on the euro-zone debt crisis. Sentiment was also boosted by a slew of better-than-forecast U.S. data last week.

The KLCI also rallied for a 3rd day, driven by the people-friendly Budget 2012 as well as more reassuring data and news from the U.S and Europe.

FBM KLCI Outlook: Any profit taking is likely to be well-absorbed
Despite anticipating the traditional post budget blues, any profit taking consolidation is likely to be well-supported amid looming general election, improving technical indicators and concerted efforts by the EU members to stabilize Euro debt crisis. The positive development over the weekend meeting that European leaders will do “everything necessary” to ensure that banks have adequate capital, as well as Belgium received approval from France to buy as much as 100% of Dexis (the 1st victim of the ongoing Euro debt crisis) to dismantle the French-Belgian lender should alleviate fears of the debt crisis roiling global markets.

If current short term uptrend line support (near 1374) or UTL is maintained, the KLCI is likely to extend its gains along the upward channel. Immediate resistance levels are 1410 (5-d SMA-weekly chart), 1420 (30-d SMA-daily chart) and 1446 (10-d SMA-weekly chart). Immediate supports zones are the 1377-1387 gap (23 September). A breakdown below UTL will trigger more selldown towards 1354 (last week’s low).

Daily KLCI Shows Upside Bias Unless Short Term Uptrend Line Support Near 1374 Is Broken

FBM KLCI 10-10-2011

Weekly KLCI Is Upside Bias Amid Hammer Formation And Upticks In Technical Indicators

FBM KLCI 10-10-2011a

Source: HLIB Research

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