Technical | Fundamental Analysis Discussion Stocks Listed In Bursa

Wednesday, January 21, 2009

Bursa-Chat Market Views >>> KLCI + FKLI + Plantation Sector

Bursa-Chat Market Views By Zhuge Liang

Further Weakness Likely but Oversold Momentum Could Cushions Downside

Bursa Malaysia shares ended lower on Tuesday as profit-taking picked up momentum following the defeat by the ruling coalition in the Kuala Terengganu by-election last Sunday, which dampened sentiment locally. KLCI fell from opening 885.82 to intra-day low of 878.81 prior to closing at 880.37 to lose 9.19 points, or 1.13% for the day. Losers led gainers 350 to 135 on slower trade totalling 375,819,800mn shares.

Further weakness is likely today given the weak buying momentum on the broader market, with KLCI on the verge of breaking below 880 (the 30-day SMA). The oversold momentum on daily slow stochastic and limited investor participation should cushion downside for shallow profit-taking dip. Immediate resistance is set at the previous 900 psychological support, with 907, which coincide with the 8 Jan pivot low and then 910 acting as stronger resistance.


Lower Liners to Ease Further on Bearish Technical Readings
Banking stocks AMMB and BCHB could dip towards better support from RM2.20 and RM6.00 before more buyers emerge in the current weak market sentiment, while lower liner construction related stocks MRCB, Tebrau and UEM Land should ease further due to short-term bearish technical readings. We will revise our call on Genting, Resorts World and Tenaga to Buy on Dip given the weak buying momentum, hence the higher possibility to buy at cheaper levels.



Spot month January KLCI futures contract gapped 11.5 points lower to open at 881.0 on Tuesday, rose to a high of 883.5 in early morning trade before selling off to low of 874.0 before rebounding a little to close at 878.5 for a 14-point loss for the day. Trading volume stayed modest to total 5,452 contracts.

While the immediate outlook remains bearish given the fresh sell signal on daily MACD, the buy signal on daily slow stochastics at the very oversold region implies good technical rebound potential. A reversal to a slight premium from recent discount against the cash index also improves chances for technical rebound. In any case, expect strong resistance from stale bull selling to cap upside below 920.



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