ZLBT FKLI Views 02 June 2011

The bulls are down but not out
FKLI have 3 Rising Methods potential
Look for futures to trade lower. Overnight US equities snapped its four consecutive winning streak and tumbled 2.2% on disappointing job report and ISM manufacturing index.

Also, Moody's move to downgrade Greece's sovereign debt added to the bearish fire. On local front, FBMKLCI dropped marginally, pressured mainly by the fall of financial counters. Sentiment turned upbeat with basis priced premium against its underlying. On the side note, RHB Cap surged to 14-year high yesterday as banking giant CIMB and Maybank prepare to compete against each other to bid for the smaller lender. Besides that, foreign funds were quietly buying up stocks where they have bought RM10.3 billion worth of stocks, and sold RM8.7 billion for the month of May.

Futures traded within its Tuesday's range and formed the bearish harami formation upon closing. This formation carries early reversal signal and likely to entice sellers and some long liquidation. Despite that, uptrend line established since May 24 remained intact with near term outlook remained bullish. Buyers deemed to safeguard the support level of 1544 and thereafter 1532. To the upside, resistance pegged at 1555.

Strategy

Aggressive trade may long with stop on close below 1525.