While the daily slow stochastics buy signal supports upside bias for FBM KLCI this week, other weakening technical indicators imply further consolidation ahead for blue chips.
On the other hand, lower liners and small-cap stocks tell a different story, with resurgent buying momentum and rotational interest likely to boost retail participation on lower liners as blue chips congest. Speculation on potential beneficiaries from the upcoming Budget 2011 should provide added fuel to market sentiment.
Immediate FBM KLCI support is fixed at 1,456, with next support is at 1,445, the previous Friday's low.
Meanwhile, immediate resistance will be at the recent high of 1,479, with stronger hurdles at 1,490, which was the January 8, 2008 peak, and then the psychological 1,500 level.
The all-time high of 1,524 of January 14, 2008 will be a formidable upside barrier in the immediate term.
Sector-wise, construction-related companies Gamuda, MMC Corp, MRCB and UEM Land should out-perform in coming weeks, given anticipation that the government will give the go-ahead for the "Greater KL" projects proposed in the10-year Economic Transformation Programme.
Water-related stocks such as Jaks Resources could also attract more buyers on hopes of eventual resolution of the Selangor state water management and ownership.
Meanwhile, the grossly oversold situation on rubber glove makers should attract bargain hunters looking for technical rebound upside this week.
The subject 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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