The Malaysian bourse is expected undergo further corrections as investors take time to digest the impact of H1N1 flu cases while awaiting the release of manufacturing sales, inflation and foreign reserves numbers this week.Except for the weekly slow stochastics and daily MACD indicators for the KLCI which triggered sell signals last week, other technical momentum indicators are still friendly to suggest that the current uptrend remained intact. Moreover, the oversold situation on the daily slow stochastics calls for technical rebound potential this week. Longer-term trend indicators also reinforce medium-term upside potential.
While blue chips are expected to extend low-volume consolidation, the present two-tier market suggests that lower liners may still stage strong comeback if robust buying momentum returns. The construction, oil & gas and steel sectors may bounce back once the indigestion from recent high volume peaks has been neutralised by sharp profit-taking pullbacks.
As for the KLCI, look for the retracement levels of the most recent pivot low of 952 ( April 29) to the 1,037 peak (May 7) at 1,005 (38.2 per cent), 995 (50 per cent) and 985 (61.8 per cent) for support formation. More solid support platforms are at the 30-day SMA (975) and the 200-day SMA (949). On the flipside, immediate upside hurdle is seen at 1,020, next at 1,027, and higher up at the recent peak of 1,037.81.
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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