Ahead of Thursday’s holiday for Wesak Day, the Malaysia stock market had alternated between positive and negative finishes through the last six trading days since the end of the four-day losing streak in which it had dropped more than a dozen points or 0.9 percent.
The Kuala Lumpur Composite Index now rests just above the 1,425-point plateau and the losses may accelerate on Friday.
At 9.20am, the FBM KLCI opened at 1422.70.
RHB Retail Research, in a note today (May 5), said the FBM KLCI Benchmark recent rebound paused on Wednesday as it closed with a neutral tone at 1,425 pts – below the 50-day SMA line.
The index opened at 1,425 pts and then fell to the 1,414 pts low before rebounding and closing at the opening level.
The neutral tone beneath the 50-day SMA line on Wednesday signals that the recent rebound may be short-lived in the later sessions as strong selling pressure below the moving average line is expected to dominate.
Given the RSI points at the 50% neutral level, the FKLI may hover between the moving average line and the 1,412 pts immediate support in the coming sessions, with a downside bias towards breaching the immediate support in the later sessions.
In line with the 50-day SMA line pointing downwards, RHB maintains our bearish trading bias.
Traders are advised to keep the short positions initiated at 1,414 pts, ie 10 Mar’s close. To manage the trading risks, the stop-loss threshold is fixed at 1,437 pts.
The immediate support is set at 1,412 pts – 17 Mar’s close – and followed by 1,400 pts. On the upside, the first resistance is pegged at 1,437 pts, which was 3 Apr’s close, and followed by 1,445 pts or the high of 7 Mar.
MayBank Interment Bank said the FBMKLCI Index recouped most of the earlier losses, but it still ended the day lower as traders and investors trimmed positions ahead of the mid-week break and as BNM surprised with a 25bps interest rate hike.
The benchmark index shed 0.12pts, or 0.01%, to close the session at 1,425.99, led by declines in KLK, MAXIS, AXIATA and CDB. Market breadth reverted to negative with losers outnumbering gainers by 553 to 277.
A total of 3.48b shares valued at MYR1.57b changed hands. After the mid-week break, buying interest is likely to be mild and selective heading into the weekend with plantation names ripe for a rebound along with bank stocks.
Technically, Maybank IB expects the FBMKLCI Index to range between 1,415pts and 1,445pts today, with supports remaining at
1,380pts and 1,350pts.
