Lower liner steel and construction-related stocks Sino Huaan, Kinsteel, Perwaja, MRCB, Ranhill and UEM Land remain top technical picks to out-perform the broader market.The lower-than-expected US consumer confidence data and sharp fall in commodity prices last Friday due to concern the steep five-month recovery since March has lifted share prices to become overpriced should spark profit-taking correction in the region early this week. Nonetheless, expect the profit-taking correction to be shallow given that most investors would have sold on rally the previous few weeks, and are looking to buy back upon a more significant correction. Core blue chips are expected to consolidate while buying interest shifts towards lower liners on active rotational plays.
On blue chips, investors should buy on dip defensive gaming stocks Genting Bhd and Genting Malaysia given that the H1N1 virus scare has pressured share prices down to more bargain levels. Lower liner steel and construction-related stocks Sino Huaan, Kinsteel, Perwaja, MRCB, Ranhill and UEM Land remain top technical picks to out-perform the broader market. Also buy on dip Kencana and Wah Seong, while buy DNP, Hovid, Leader and RCE Capital on any profit-taking dips.
As for the KLCI, immediate support upon correction is set at 1,180, with 1,171, then 1,164 and 1,156 acting as stronger support platforms. On the upside, the significant upside hurdle will be at the 1,200 psychological level, which requires a bullish breakout to aid further upside towards 1,220, and then 1,248, which represents the 61.8 per cent FR of the fall from 1,525 all-time high to 801 pivot low, acting as a major resistance.
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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