As daily momentum indicators are increasingly overbought, investors can expect a profit-taking correction this week which is sorely needed to neutralise the excessive overbought condition. Nonetheless, note that the KLCI had staged bullish breakout above the 200-week SMA which is currently at 1,099, signalling further upside bias going forward.
Sector wise, plantation, oil & gas, construction and steel-related stocks should out-perform the broader market this week. Look for buying opportunities on dips to gain leverage on an eventual medium-term up-trend. Buy on dips AirAsia, Axiata, BCHB and IOI Corp for medium-term gains, while sell on rally some steel-related stocks to capture strong percentage profits. Meantime, oil & gas-related stocks such as Dialog, SapuraCrest, Petra Perdana, SAAG and Perisai are expected to rise further in the medium term, given that crude oil prices are expected to rise further due to inflationary pressures.
Resurgent buying momentum in the region of 1.5 billion to 2 billion shares is critical to sustain upward momentum towards the next pivotal resistance of 1,165, the July 31 pivot high last year. This target resembles the 50 per cent Fibonacci Retracement (FR) of the sell-off from record high of 1,525 to 801 pivot low. Higher up, watch for resistance from 1,188, with next upside target seen at the 1,200 psychological level. In the meantime, immediate support is revised upwards to 1,140, with 1,120 and 1,100 to provide stronger support platform.
The subject expressed above is based purely on technical analysis and opinions of the writer. It is not a solicitation to buy or sell.
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