Improving technical momentum and trend indicators for the KLCI last week, reinforced by resurgent buying momentum, should ensure further upside for this week. Nonetheless, losses in US stocks last Friday, which were sparked by a surge in the unemployment rate to an almost 16-year high of 7.2 per cent in December, could act to tone down bullish sentiment on the local market in the early part of this week. Looking at the daily KLCI chart, profit-taking and selling should be cushioned above the revised higher immediate psychological support level of 900, with the bullish breakout point near 888 and 880 acting as a stronger support zone. On the upside, immediate resistance is set at last week's high of 936, with stronger resistance from 940, and then 949.
Sector wise, plantation and oil & gas stocks may dip further given the sustained weakness on crude oil prices which continued to trade near the US$40 a barrel mark, while lower liner construction stocks such as MRCB, Ranhill and Tebrau should register profit-taking dips following last Friday's strong gains. Remain bearish in the near-term on banking stocks such as AMMB, BCHB and Maybank with further weakness likely as economic growth suffers from spillover recessions in developed markets.
The subjects expressed above are based purely on technical analysis and opinions of the writer. It is not a solicitation to buy or sell.
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