Kuala Lumpur Stock Market Outlook - Forecast For The Day - 21 June 2007 !
KUALA LUMPUR STOCK MARKET OUTLOOK: Forecast for Thursday, June 21, 2007: Expect an across-the board-rally as players return but take profit on rally. Do not chase stocks. Buy on dips.
Technically speaking:
1. As at Wednesday’s close at 1386.27 the KLCI was higher by 9.48 points or 0.31%, making a new historic high. Volume was clearly higher at 1.77 bln shares, the KLSE’s highest in 1 ½ months. Gainers led losers 641 to 274.
2. In yesterday’s newsletter we had said this, “We believe our market will leap.” We based our belief on the technical strength of many of our stocks, which are experiencing “high tide”.
3. True to form, the KLCI leapt out of its consolidation, closed at 1386.27, way above its resistance of 1373 to make a new historic high close.
4. Yesterday was truly a significant day as most stocks rallied. It’s an across-the-board rally with 641 gainers vs 274 losers.
5. With this excellent close (which, frankly, few analysts and observes had expected as most predicted a lethargic market) you can expect an explosive opening this morning.
6. But should one buy in the morning? Try not to because they tend to peak around 9.30am and then pullback. Our view is therefore to sell and take some profits on any early morning rally, and wait for a pullback or correction to buy back on dips, either around 10.30am or 3.30pm, as these are the two “soft” periods in a bullish trading day.
7. For longer-term investors. We believe this market and stocks can move higher. You can therefore still hold onto your stocks, as the time is not ripe for the market or stock to form a top yet.
8. Yesterday cement stocks shot through the roof. For example CIMA, YTLCMT and LMCEMT, as demand for building materials rises with the increase demand in properties. CIMA’s next target is 8.70, YTLCMT’s target is 7.30 and LMCEMT’s targets are 2.16 and 2.77.
9. The next group of stocks that garnered renewed buying interest is property stocks. Oh, the zippy EQUINE (close at 3.66) is running again after a rest. Next targets are 4.30 and 4.80. Its partner in the building of the 2nd Penang airport, MRCB, has also woken up.
10.So are PJDEV, SUNWAY, ENCORP, TA, TA-WB, E&OPROP, KEURO, DBHD and DNP, the last three being new stocks to watch.
11.Oil and gas stocks were on a roll with RANHILL, UMW, EDEN, SAPCRES-WA, FAVCO and SAAG, just to name a few while construction stocks were also bought up, like UEMBLDR, MRCB, etc.
12.Note our stocks-to–watch for today are: SUNWAY, UEMBLDR, COMMERZ, FAVCO, ENCORP, E&OPROP*, EQUINE, TWSCORP, UMW, PJDEV-WB, TA-WB*.
13.New stocks-to-watch are: DNP*, DBHD, KEURO, RCECAP.
14.DNP looks great and is a confirmed buy above 3.10. KEURO is rising too and so are DBHD and RCECAP.
15.This stock RANHILL amazes us. Just when nearly everyone is now bearish on this stock after an emphatic denial from RANHILL’ s management about striking oil, it rebounded by a hefty 0.46 sen to 2.48. This stock is definitely not for the faint-hearted, and honestly, we don’t know whether we should trust what the Board is going to say anymore. After their denial, the market can make a higher high – higher than the day when the erroneous headline was made! So much for news and fundamentals. No wonder chartists call this illogical announcements “funny-mentals”. Why bother reading the newspapers, huh? Elliott wave would have done much better, ya?
16.Here is another expected reaction from investors after the CEO of TRANMILE, Gan Boon Aun, quit. The stock plunged 0.81sen to 4.94 (but not before it initially rose 0.30 to 6.05). But the puzzling question is this. How come the authorities took no action on the persons responsible for these accounting irregularities till now? In America, they would have been charged. Look at Enron and Worldcom, for example. Kenneth Lay, Jeff Skilling and Fastow were swiftly charged for cooking Enron’s books and Bernie Ebbers for cooking WORLDCOM’s books. Kenneth Lay died before he could serve his sentence, Skilling got 24 years in jail and Bernie got 25 years in jail. Let’s see what and when the authorities are going to book them in TRANSMILE’s case. Oh, we did mention that the next target is RM3.00? Hmm, it’s possible (maybe 2.94), so you still ant to buy TRANMILE at 4.94 because the funny-mentals says it is “cheap”?
17.Our ringgit appreciated by 80 pips yesterday from 3.4350 to 3.4270.
CONCLUSION: We did have a bullish breakout for the KLCI, as we had anticipated and most stocks rallied. If you had switched to stock index futures, you would 14 points to 1392. We continue to pick stocks from the strong sectors like property, construction, oil and gas. If we are right about the Dow making new highs to 14400, our KLCI could test 1492 and FKLI to test 1466. This will be another good round for trend followers. Finally, our KLCI should be trending up for now! Shorts will likely be shot! Get out of shorts!
Long-term Upside Targets:1492 (Target amended on 15/6/07).
Immediate downside targets: 1334/1291/1222 By: Fred Tam Article Source: http://www.ArticleDashboard.com Fred Tam is the owner of www.fredtam.com and
www.picapital.com.my F1 Trader Online - Know when to enter & exit the markets.
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