Dec 24, 2009


fbm-klci-chart As the FBM KLCI failed to close above the  50-day moving average, now at 1,262, the technical picture has turned weaker. The probability for a drawn out profit-taking correction has increased. In  the meantime, immediate support remains at 1,254, the 61.8% Fibonacci Retracement (FR) of the upswing from the 1,233 low of 2 November to the 17 November high of 1,288, with the 30 November pivot low of 1,248 acting as critical support preventing further downside risk toward 1,233.  Immediate resistance will be at 1,267, the 38.2%FR, with 1,275, the  23.6%FR level, and then 1,280 and the 17 November pivot high of 1,288 as subsequent tougher hurdles.

Buy on Dips on Banking/Telco Stocks
Maintain call to Buy on Dips banking stocks AMMB, CIMB, Maybank and Public Bank for recovery toward their immediate upside targets, while telco counters Axiata and TM are more attractive to bargain hunt towards RM2.90 for technical rebound gains.

Meantime, lower liners with low RSI readings such as Gamuda, KUB, Zelan and Scomi Group are quiet oversold, hence downside risk should be minimal with good upside on a technical rebound.

The weak closing and black candle pattern for a third consecutive trading day confirmed the bearish market undertone and unwillingness of buyers to commit at current levels.

Prices should stay range bound on slow trade, with the Bollinger band mid-point (1,264) and 30-day SMA (1,267) capping immediate upside, and stronger resistance seen near the  upper Bollinger band (1,275) and 1,280.  Immediate support remains at the lower
Bollinger band (1,253), with stronger support at 1,250.  source TA securities