The Malaysia stock market gave up less than a single point on Friday, but that was enough to snap the six-day winning streak in which it had jumped almost 45 points or 3.4 percent along the way. The Kuala Lumpur Composite Index now sits just above the 1,450-point plateau although it’s predicted to bounce higher again on Monday.
At 9.15am, the FBM KLCI opened at 1452.60.
RHB Retail Research, in a note today (July 31), said the FKLI experienced mild profit-takings on Friday, pulling back 3.50 pts to close at 1,454 pts.
The index started off Friday’s session at 1,457.50 pts. After moving between 1,459 pts and 1,449 pts, it closed below the opening price. The price action affirmed the 1,460-pt level acting as the immediate resistance.
The index should undergo sideways consolidation before resuming its upward movement. In the event profit-taking activities are extended, the FKLI may retreat towards the 200-day SMA line or the 1,430 pts support.
At this stage, as RHB has yet to see a bearish reversal candlestick, coupled with the immediate support remaining intact – the bullish setup is deemed valid. RHB will hold on to positive trading bias until the index breaches below the stop-loss point.
RHB recommends traders to stick with the long positions initiated at 1,389 pts, ie the close of 16 Jun. To manage the downside risks, the stop-loss threshold is adjusted higher to 1,400 pts from 1,372 pts.
The immediate support has been changed to 1,430 pts, followed by 1,400 pts. Conversely, the immediate resistance stays at 1,460 pts, followed by 1,500 pts.
CGSCIMB said the local benchmark FBMKLCI (KLCI) was flat for the day, losing 0.92pts or 0.06% to end the week at 1,450.35. Week-on-week, the index gained a hefty 36.83pts or 2.61%.
Sector-wise, the majority was in the red except for healthcare (+1.09%), REIT (+0.35%), industrial products (+0.25%) and financial services (+0.09%).
The laggards were led by plantation (-0.77%), technology (-0.62%) and construction (-0.55%).
Trading volume fell to 3.03bn (down from 3.73bn on Thursday) while trading value eased to RM1.93bn (down from RM2.44bn previously). Market breadth turned negative for the first time in four days as 474 decliners beat 415 gainers.
Even though the KLCI was marginally lower on Friday but it managed to seventh white candle. However, the range of the candle continued to shorten, further indicating that the rally is tired and in need of a rest.
The upper shadow on the last couple of trading days signal that some selling pressure may be setting in. The overbought situation likely warns us that a consolidation may take place sooner rather than later.
A pullback may see the index fall back towards the 1,430-1,438 levels next.
If there are any residual strength in the tank, the final leg may carry prices up to next resistance is seen at 1,460-1,465 before a deeper pullback takes place. CGSCIMB’s portfolio stays in risk-on mode this week.
