KL Stock Market : Forecast for the day!

KUALA LUMPUR STOCK MARKET OUTLOOK: Forecast for Tuesday, June 19, 2007: KLCI expected to breakout, but only select stocks are in demand. Pick your stocks wisely. SLB/Hold.

Technically speaking:

1. As at Monday’s close at 1372.28 the KLCI was higher by 11.63 points or 0.31% but on slightly
higher volume of 1.36 bln shares. Gainers led losers 499 to 403.

2. Yes, we are just a whisker away from the all time high close, which was registered on June 6,
when it closed at 1372.38.

3. After witnessing this “breakout” of the Bollinger bands for a close above its upper band, you
can expect a “gap” up opening if the Dow closes in positive territory last night.

4. Note that the Dow is also a hair’s breath from its all time high. The Dow closed up 85 points, at
13639.50 on Friday while its all time high is 13692.00 clocked on June 1.

5. It doesn’t take a genius to figure out that if the Dow closes at a new record high on Monday,
you can expect our KLCI to “gap” up.

6. But, we are very disappointed with the performance of individual stocks even as the KLCI is
about to make another new record high close. There just isn’t much oomph at all on many of
our stocks as they remain lackluster and lacking in follow-through buying.

7. It is only a few situational stocks from the strong sub-sectors like property, oil and gas,
construction stocks that spice up what would otherwise be a very dull market.

8. Our stocks lack buyers. Where have all of them gone? Take a look at Singapore, Hong Kong,
Korea, Australia, China, Indonesia, Philippines and even Thailand where its index still sparkle
despite the political uncertainty caused by the military junta. It’s a crying shame for
Malaysian stocks not to be played up. Instead, at best we are only playing ketchup (catch-
up).

9. It is frustrating, as it would take a sharp-shooter to be able to buy the right stocks to see
some monetary gains. Again, what a shame!

10. Still, we are sharp enough to “zero in” to a few prospective ones like SAPCRES-WA, FAVCO,
BRDB, SAPTECH, EDEN, MUHIBAH, MUDAJAYA, BURSA, COASTAL, etc.

11. RANHILL was suspended after it was reported that it struck oil! It closed up 37 sen to close
at 2.18, off the high of 2.35. Based on Elliot wave, the targets are 2.65 and 3.70.

12. We think BURSA is potentially breaking out and the cheaper buy would be BURSA-CC,
which is at-the-money. It is good for 30 sen, at least, if Bursa hits 12.90.

13. New stocks-to-watch are KPS, BURSA-CC, SPSETIA.

14. PJDEV and PJDEV-WB also looks good.

15. The ringgit rose strongly by 350 pips from 3.4550 to 3.4200, and this should translate into
a stronger market for our stocks.

CONCLUSION: We expect a bullish breakout for the KLCI. Not all stocks would rally, as such if you want to capitalize on the KLCI rally, switch to stock index futures. If we are right about the Dow making new highs to 14400, our KLCI could test 1492 and FKLI to test 1466. This will be another good round for trend followers. Finally, our KLCI should be trending up for now!
Long-term Upside Targets:1492 (Target amended on 15/6/07).
Immediate downside targets: 1334/1291/1222

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