1.As at Tuesday’s close at 1373.71 the KLCI was higher by 21.30 points or 1.57%. Gainers led losers 544 to 393 and trading volume was 2.12 billion shares.
2.Both the local bourse and the regional bourses rebounded strongly to cover the down-gap registered on July 27, the day after the Dow plunged 311.5 points on July 26.
3.As chartists, we would not be in a hurry to call a “buy" unless the down-gap is “filled" and exceeded on the upside.
4.We would therefore view yesterday’s rebound as “technical" in nature. If this rebound cannot continue into today, but instead the market makes a turn downwards, then we would be correct in labeling this rebound a “technical
rebound".
5.But if the KLCI can exceed 1375.45, the low of July 26, the day just before the down-gap on July 27,we would reconsider our stand that this market is now in a bear trend.
6.Still, a buy would only be confirmed if the KLCI breaks out off 1392.18, the all time high clocked on July 24.
7.Right now we are still staying out, except for a few stocks whose sell-stops have not been triggered.
8.And based on yesterday’s close the market was strong enough to trigger 28 stocks with CBO 20-10 buy signals, out of which we have selected 4 stocks for you just in case you are looking for some stocks to buy.
9.These 4 stocks-to-watch are: MMM, AKN*, MAXTRAL, MAHSING*. These are quick buys, and look to exit at the targets mentioned.
10.Other gap-up stocks that could have some upside today are WIJAYA, RUBHD, RPOWER, NAMFATT, MUTIARA.
11.Although the STII rose 21.37 points to 3547.66, the Singapore market is bearish with 104 new sell signals and only 2 new buy signals based on the CBO 20-10 buy formula. As such we continue to stay out of the Singapore stock
market.
12.The ringgit recovered a bit of ground, from 3.4600 to 3.4520 for an 80 pips gain. Look for more ringgit recovery to stabilise Malaysian stocks.
CONCLUSION: We consider Prof Pruden’s target of 14,400 having been achieved. Watch closely the movements of the Dow, which may rebound after a sell-off. But note that any rebound on the Dow is now viewed as technical in nature. Look for resistance at the 13,688 level.
Long-term Upside Targets:1494 (Target amended on 15/6/07).
