Weekly Market Outlook - KL bourse rally has further upside potential (ext: BT)

Lower liners in the steel, construction and oil & gas sectors should stage a strong comeback if the daily average trading volume tops the two-billion-share mark, says a research head

Despite the increasingly overbought daily and weekly momentum indicators following last week's breakout rally, there could be further upside room for the local stock market this week, especially for lower liners which had corrected to more bargain levels. Selected blue chips such as defensive gaming stocks Genting and Resorts World, and palm oil plantation stocks IOI Corp and Sime Darby are also expected to appreciate further in the medium term given the improved earnings prospects as economic recovery gains pace in the second half of the year and as CPO prices stay resilient.

Meantime, lower liners in the steel, construction and oil & gas sectors such as Ann Joo, Sino Hua-An, Kinsteel, Perwaja, MRCB, Tebrau, UEM Land, Zelan, Kencana, Petra Perdana, SapuraCrest, Scomi Group and Wah Seong should also stage strong comeback, especially if daily average trading volume tops the two-billion-share mark.

As for the KLCI, a convincing breakout above last week's high of 1,050 will boost upside momentum towards next significant resistance from 1,064, which was a previous support floor in August last year, with next upside target at 1,078, which represents the 38.2 per cent FR of the tumble from the all-time high of 1,525 to the pivot low of 801. On the downside, immediate support is revised upwards to 1,022, with more formidable support cushions at 1,012 and the 1,000 psychological support.

The subject expressed above is based purely on technical analysis and opinions of the writer. It is not a solicitation to buy or sell.