HLBank Research Highlights
Traders Brief - Profit taking looms ahead of long Hari Raya holidays
Bursa Malaysia recap
KLCI ended +5 pts after rising as much as 11 pts intraday
- Asian stock markets retreated from early session highs as China’s SHCOMP (-1.2% to 3924 and -24% from 52-week high) failed to extend its gains for the 4th straight session as investors adopt a 'wait-and-see' approach to judge whether market undertone has stabilized following recent carnage. Sentiment was also cautious ahead of Greece’s parliament approval on its revised bailout terms today.
- After rising as much as 11 pts intraday to 1727, KLCI reduced the early gains to only 5 pts at closing ahead of the long Raya holidays (Bursa Malaysia will be closed on 2H 16 Jul and 17 July), lingering domestic uncertainties over political glitches and ongoing probes on 1MDB.
Wall St recap
Dow jumps 76 pts to record its 4th straight gain
- After dipping 21 pts in the early session following a poor June retail sales report, Dow recovered to close 76 pts higher at 18053, as sentiment improved due to positive earnings from Johnson & Johnson, JP Morgan andWells Fargo coupled with a potential US$23bn buyout of Micron Technology by China's state-backed Tsinghua Unigroup.
- Meanwhile, market was also boosted by expectations of a possible delay rate hike in Sep to Dec this year amid sluggish June retail sales, uneven U.S. recovery and external risks.
KLCI outlook
R3: 1754
R2: 1746
R1: 1727
Current: 1721
S1: 1700
S2: 1685
S3: 1671
Weekly trend: Sideways
Performance tracker (successful hit rates):
Jan: 92%
Feb: 73%
Mar: 71%
Apr: 80%
May:56%
Jun: 33%
July:63%
YTD: 67%
Profit taking looms ahead of long Hari Raya holidays
- Ahead of the long weekend Hari Raya holidays and pending the outcome of Greece’s parliament approval on revised bailout plan today, KLCI is likely to trade sideways for the rest of the week, supported by the formation of shooting star candlestick yesterday. Trading sentiment is also not expected to improve significantly with lingering political uncertainties and IMDB saga.
- Key supports are situated at 1700, 1685 (9 July low), 1671 (17Dec 14 low) and 1660 (28 Aug 13 low).
- A sustainable close above 1718 (76.4% FR) and 1724 (30-d SMA) zones is vital for the local bourse to resume its uptrend from 1671. Further resistance levels are 1746 (61.8% FR), 1754 (50-d SMA) and 1769 (50% FR).
- Today’s recommendation (FIG4). We recommend OKA (Trading Idea) as the group (being one of the largest precast concrete players in Malaysia) is likely to benefit from rising infrastructure developments in Malaysia from the 11th Malaysia Plan. Technically, the stock is poised to test RM0.90-0.97 following a bullish breakout, supported by positive indicators, Cut loss at RM0.78
Source: Hong Leong Investment Bank Research - 15 Jul 2015
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