Investors may look for short-term buying opportunities on dips, especially blue chips and rubber glove makers, construction players and oil & gas players are attractive, says a research head


All technical indicators on FBM KLCI turned more bearish following last week's sell-off, signaling potential further weakness ahead as risk aversion increases given the sharp corrections suffered on global stock markets.




As for this week, short-term oversold indicators and last Friday's rebound on US stocks as investors deemed the recent sharp sell-off is overdone will provide a lift to stock prices.



However, the anticipated technical rebound upside for the KLCI is seen restricted to the 100-day moving average at 1,304, which must be overcome to improve upside momentum. More formidable resistance levels above are at 1,320 and 1,329.


As for potential downside risk, investors should closely watch the all-important 200-day moving average, currently at 1,266, for resilience to prevent further significant downside towards 1,254, the 76.4 per cent Fibonacci Retracement (FR) of 1,224.4 trough to 1,349.9 peak, and then 1,224, the February 9 pivot low.


Strategy-wise for this week, investors may look for short-term buying opportunities on dips, especially on blue chips such as AMMB, CIMB, Genting Bhd, IOI Corp, Public Bank and RHB Capital for technical rebound profits, as more investors looking to sell on rally and reduce positions will cap upside.


Also, lower liners such as rubber glove makers Adventa and Supermax, construction players MRCB, Tebrau and UEM Land, and oil & gas players Dialog, Kencana and SapuraCrest are much more attractive to bargain hunt for rebound profits.


The subject expressed above is based purely on technical analysis and opinions of the writer. It is not a solicitation to buy or sell.