Kuala Lumpur Stock Market Outlook : Forecast for the day, 13 July 2007 !

KUALA LUMPUR STOCK MARKET OUTLOOK: Forecast for Friday, July 13, 2007: Stocks can still rally, but stock selection is important. A close above 1374.97 is a short term buy signal.

Technically speaking:

1. As at Thursday’s close at 1366.02 the KLCI was higher by 6.75 points or 0.50%. Gainers led losers 577 to 345. Trading volume was 1.452 billion shares.

2. We were right in not ruling out a rebound for yesterday. New funds surfaced yesterday to lift stock prices higher, thanks partly to a higher Dow.

3. As a result, many stocks were "saved" from falling over the cliff. Note that we have placed many of our stocks on H/WSL (Hold/Watch Out for Stop-loss) in yesterday’s newsletter. Had it not for yesterday’s rebound, many stocks would have triggered our stop-loss, setting of sell signals.

4. Today, our market should take the cue from Wall Street’s performance overnight.

5. Today our stocks-to-watch are: UEMWLRD, YTL, BONIA, BSTEAD, SIME, SWEEJOO* and TAMCORP*.

6. Of these, SWEEJOO and TAMCORP look particularly strong.

7. New stocks are EKOVEST-WA, RESORTS although we would not discount RBLAND, which is rallying like EKOVEST.

8. Technically, the KLCI is still within the Bollinger Band. It’s too early to call a sell. The KLCI still has a chance of recovering.

9. Until the 1347.5 level is broken, the KLCI can rebound.

10. And a close above 1374.57 is a short-term buy signal, and will put the market back into a tripe screen buy mode.

11. KLCI can recover and rise further to test 1494, as we expect a stronger Dow, which Professor Hank Pruden tags the target for the Dow at 14,400.

12. We would be wrong if the KLCI falls to close below 1347.5 or lower.

13. The ringgit was slightly stronger at 3.4485 as compared to 3.4490.

CONCLUSION: The rebound fro the Dow "saved the KLCI from falling further. As we are forecasting a higher Dow, its strength should rub-off onto Asian markets, and like it or not, some fallout will benefit the Malaysian market. It is not time stay out of the KLCI yet as the KLCI, at 1359.27, is still above its lower Bollinger band support of 1357 and its lower support of 1347.5. On the other hand, a breakout of the upper band at 1381 or higher would be a good sign of a possible explosive rally.

Long-term Upside Targets:1492 (Target amended on 15/6/07). Immediate downside targets: 1348/1319/1291/1222

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