1. As at Wednesday’s close at 1377.14 the KLCI was higher by 4.00 points or 0.29%. Gainers led losers 498 to 389. Volume traded reached 1.2 billion shares
2. Yesterday the stocks that were clearly in demand were oil and gas stocks like SAPCRES, SAPCRES-Wa, UMW, PETRA, WASEONG, SCOMI, followed by construction and property stocks like UEMBLDR, UEMWLRD, JLAND, WCTLAND, BRDB, YTLLAND, YTLLAND-PA, EQUINE, HUNZPTY, besides finance stock BURSA, and energy stocks TM and SARAWAK.
3. But as the day wore on, the early morning rally fizzled out a bit from profit-taking and many stocks ended up lower for the day.
4. Still, our technical view is that the rebound that started on Tuesday is still intact.
5. Today we expect some stocks to continue with their rally. But should some stocks stall, investors should “hold" onto them and not cut loss as we expect a rebound and an uptrend continuation once the Dow starts trading again on July 5.
8. We like oil and gas stocks like FAVCO, SCOMI, KENCANA, SAPCRES-WA, and UMW-CA.
9. The rest are also good.
10.In short we expect the KLCI to move higher to test 1494 as Professor Hank Pruden’s target for the Dow of 14,400 is within striking distance.
11. The ringgit closed almost unchanged yesterday, from 3.4440 to 3.4435 or 5 pips higher, but news of the Malaysian government determined to keep the ringgit strong, and CNN News advocating to buy the ringgit vs the U.S. dollar should help firm up Malaysian stocks.
12. As the KLCI closed at 1373.14, higher by 8.77 points, the short-term buy signal is intact.
CONCLUSION: We expect as a recovering Dow to rub off onto the Asian and Malaysian market this week. So far we are correct. The KLCI stopped exactly at the lower Bollinger band support of 1348 and rebounded to close above it, at 1377.14. A breakout of the upper band at 1379 or higher today would be a good sign of a possible explosive rally.
Long-term Upside Targets:1492 (Target amended on 15/6/07).
