While all daily and weekly momentum indicators for the FBM KLCI are suggesting increasingly overbought technical conditions, which require a more significant downward correction to neutralise, trend indicators stayed bullish and continue to suggest further uptrend ahead. Profit-taking corrections should be shallow, despite the weak buying momentum following gains as blue chips remain well supported by firmer external markets. Meantime, the broader market should extend low-volume consolidation, as market players are expected to stay on the sidelines ahead of the long Hari Raya Puasa holidays next week.
Stock wise, investors should continue to accumulate undervalued banking stocks such as AMMB, EON Capital and Hong Leong Bank, and gaming counters Genting Bhd and Berjaya Sports Toto given the improving outlook for economic recovery next year. Meantime, Kinsteel, Kencana Petroleum, Kurnia Asia and MPHB may lead a revival of rotational plays on lower liners ahead.
As for the KLCI support this week, expect the breakout level at 1,196, the previous 14 August pivot high which now becomes support, to cushion immediate downside, with 1,190 as stronger support. On the upside, a convincing breach above last week’s high of 1,210, preferably on stronger buying momentum of above 800 million shares, will improve upward momentum towards 1,220. A successful breakout will meet significant resistance at 1,248, which represents the 61.8 per cent retracement of the plunge from 1,525 all-time high to 801 low.
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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