KLSE OUTLOOK FOR 23-10-2019 (WEDNESDAY):LOWER LINERS PULL BACK TEMPORARILY HALTING THE SMALL CAP RALLY. LOOKOUT FOR A BOTTOM –FRED TAM

STRICTLY NO CIRCULATION OUTSIDE OUR GROUP

Dear all,

The KLCI was higher by 3.16 points or 0.20% to close at 1574.09.

Daily turnover was higher at RM2.071 billion as compared to RM1.459 billion. There were 411 gainers vs 450 losers with 1154 counters unchanged.

KLCI started off the morning session with a fall and rebounded from an intraday low of 1567.70 to gain traction and rally in the final hour to close at its intraday high. Many index-linked stocks went up in the afternoon session to support the rally of the KLCI.

Although the KLCI index went up in the final hour the lower liners, capped by the FBM MidS and Small Cap, fell. It is like the investors are switching to the KLCI from the lower liner stocks. But it is too early to say that there is a switch to blue chips as lower liners have rallied a lot and it is appropriate to take some profits and switch to other counters.

Many of our lower liner stocks pull back or stayed sideways after successive rallies from last week and on Monday. But despite the large pull back in some stocks like DSONIC, UWC, GREATEC, we must understand that these stocks have rallied a lot – hence this pullback is still considered mild. 

In cases of pullbacks, we should use the 1-2 bar stops to protect our winnings and capital. 1-2 bar stops are used when the stock has rallied and is forming a parabolic trend. The definition of a parabolic trend is where the price is travelling steeper than usual. 

Only one stock in our watchlist has hit its trailing stop using the 1-2 bar stops.

ARMADA has hit the its trailing stop using the 1-2 bar rule and we will prefer to take out part of our holdings and leave the balance until the TAD Sell Signal comes out. Watch out for support at 0.36.

DRBHCOM has triggered TAD Buy Signal and we are bullish on this stock.

New stock to watch: DRBHCOM.

Other than that, we are holding into all other stocks and continue to monitor them and their respective stop losses using the TAD Sell Signal or the 1-2 bar rule. 

Stocks to watch for Wednesday: INARI, DIALOG, MFLOUR, PWROOT, REDTONE, VS.

Meanwhile, we are holding onto all remaining stocks.

Stocks on hold: HARTA, DSONIC, DUFU, EFORCE, ELSOFT, FRONTKN, KKB, KNM, PECCA, PENTA, SALUTE, TENAGA, KRONO, CARIMIN, REVENUE, PENERGY, GPACKET, DAYANG, MBMR, MNRB, MI, KGB, GTRONIC, PRESBHD, TGUAN, GAMUDA, VIS, LHI, JHM, PERDANA, MMSV, D&O, FGV, TM, MFLOUR, KNM, GREATEC, UWC, FPGROUP, PIE.

As for the FKLI, stay aside and go short below 1564 as we are still bearish. 

For FCPO, price rallied higher overriding the indecision candle from the prior day. Remain hold on long towards target of 2363. Raise stop loss to 2262 or lower. 

All the best for a great Wednesday.

Copyright Fred Tam Newsletter 2019.

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