KL Composite Index: A pause perhaps?

Strong showing was much anticipated, buoyed by renewed optimism that the worst could have been behind. After having endured some 16 months of market uncertainties with regards to the current economic slowdown, a lot of negatives we believe could have been priced in if not fully. While the jury remain out on whether the current rally
is merely a relief, the ability of most of the major equity markets to rally more than 15% - 20% from their respective lows after tumbling for more than 1 ½ years is something that the bears can ill afford to ignore.


While we believe that the worst is likely over and that a real low could have been formed, the near 11% run -up since the beginning of the month could have factored in substantial positives in the near term. While we continue to retain our positive bias in the medium term, short term however, profit taking activities could be in place to check the current uptick. Daily RSI is clearly overbought indicting a heightened risk of an imminent pullback. This is in fact healthy. Upside targets of 990 – 1,000 remain while support is pegged 947 - 950 with 927 – 935 as next.