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Monday, August 22, 2011

Further downside pressure on Bursa (BT)

The more adverse external market sentiment on increasing fears of a double-dip recession in the developed world should act to drag stocks lower this week.

As such, advocate investors to stay defensive, and only look to buy on sharp falls in share prices as the market correction should have some way to go. Any near-term rallies will likely be met by selling on strength as investors would be looking to reduce exposure pending a more substantial downward correction.

Chart wise, prefer to bargain on sharp dips banks such as AMMB and Maybank, construction companies MRCB and UEM Land, oil & gas companies Dialog Group and Perisai Petroleum for medium-term upside.

Immediate support for the FBM KLCI remains at 1,464, the 23.6 per cent Fibonacci Retracement (FR) of the sell-off from the 1,597.08 record high of July 11 to the recent extreme low of 1,423.47 on August 9, with next stronger support at 1,450.

A breakdown would see the recent pivot low of 1,423 being challenged for resilience. Immediate resistance would stay at 1,510, the 50 per cent FR and also last week's high, with strong hurdle at 1,530, the 61.8 per cent FR which mirrors the 200-day moving average, a major resistance capping upside in the immediate term.

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