Technical Commentary 06/01/10

The 3rd trading day of 2010 continues its rally with KLCI closed at 1293.17 (+4.93, +0.4%). The intraday broke out to a new high touching at 1296.44 since 21-5-08. This broke out is supported by good traded volume of 1.6560 bil shares but down by 11.2%. However even the market volume today down by 11.2% but it is still far above 40 days VMA which is sufficient for a “Mini bull”. The volume mainly contributed by 2nd & 3rd liners but we saw blue chips IOICorp, Axiata, AMMB, TM, Genting and some other FBM KLCI key components also actively participated. This is a good sign for the market to continue its rally.

We saw some correction on most of the stocks that run for the last 2 days. Today rubber stocks are in action and the price push up as high as 40% on Ruberex-WA. Ruberex up 18%, SupperMx gain another 13%, Adventa gain 11% and the rest range from 1.5% to 14%. We believe this push up is contributed by an in flow of foreign hot money. We also expect once the rubber group pushed up to reasonable price, another sector will take place. We think a rotational play will happen soon.

There are 452 up counters and 299 down counters. The RSI is exceeded 70 level threshold closed at 73.14, STC retracts slightly with %K at 91.5 and %D at 92.85. The Bollinger band further expanded by 27%. The MACD already confirmed crossing the trigger line and hooked up further. In short, all indicators show that the KLCI short-term direction is bullish biased.

The KLCI’s immediate resistance is today’s intraday high at 1296.44. The next nearest resistance is 1300-1305 (last peak during Jun-08) and the support is at Bollinger middle band at 1275 now.



Technical View on Supermx

My target on Supermx at RM5.30 came early than expected before the earning result. The reason mainly due to the inflow of hot money on the rubber stocks sector. The stock broke out of the trend line at 4.98 today. Short and long term trend looked very bullish today; hence I revised my target price on Supermx to above RM6.00 before the earning result. We need to further analyse the chart in the next few days to determine the price movement.

I use DMI for the short-term view; the green +D is hooking up strongly with the yellow ADX line trending up. This shown that the Bull is strong. I expect the ADX will hit the blue circle before the price started correct and consolidate. However I believe the price might consolidate first due to overbought today.
Other indicators:
Bollinger Band expanded by 35%
Volume increased by 192%
MACD hooked up and exceeded previous peak
RSI >90, reach overbought zone, short term might consolidate
STC: %D at 92% and %K at 100. Short term might consolidate

Long-term view on Supermax is very bullish. The MACD just started to hook up with the Bollinger band expanded 62%.
Other indicators:
RSI above 70 to close at 85.1
STC: %K at 100 and %D at 96.79
DMI: ADX line and +D line above 50