The Malaysia stock market on Tuesday snapped the two-day losing streak in which it had given up less than a single point. The Kuala Lumpur Composite Index now rests just shy of the 1,455-point plateau and it’s looking at additional support on Wednesday.
At 9.17am, the FBM KLCI opened at 1457.88.
RHB Retail Research, in a note today (Aug 30), said the FKLI rebounded above the previous resistance of 1,452.50 pts yesterday, gaining 8.50pts to settle at 1,454 pts – strengthening its rebound above the 200-day SMA line.
The index opened at 1,445.50 pts and then climbed towards the end of the session, hitting the high of 1,456.50 pts before the close.
The recent breakout, which formed a “higher high” bullish pattern, points to a sustained short-term rebound that would lead the FKLI to test 1,468.50pt resistance in the sessions ahead, supported by the improving RSI being at 57%.
However, the Bearish Marubozu pattern from 17 Aug signals selling pressure near this level.
Unless the 1,468.50-pt level is breached, RHB’s bearish bias should stay intact.
RHB recommends that traders hold on to the short positions initiated at 1,447.50 pts or 17 Aug’s close.
To mitigate the trading risks, the initial stop-loss threshold is fixed at the 1,468.50-pt level.
The first support stays at 1,430 pts, followed by 1,400 pts. On the flip side, the first resistance remains unchanged at 1,468.50 pts, ie 1 Aug’s high – followed by the 1,500 pts mark.
Maybank Investment Bank (Maybank IB) said the FBMKLCI Index staged a rebound yesterday after falling for two consecutive days, in line with the upbeat performance of regional markets.
At day’s end, the benchmark index jumped 10.38pts, or 0.72%, to close at 1,454.44pts, led by gains in PETDAG, NESTLE and PCHEM.
Market breadth was positive with advancers outnumbering losers by 535 to 504. A total of 4.02b shares valued at MYR2.85b changed hands.
Although the bullish momentum could be extended, profit taking could intensify ahead of the National Day holiday tomorrow.
All eyes will also be monitoring the US GDP and China PMI data, which will be announced later this week.
Technically, Maybank IB expects the FBMKLCI Index to range between 1,440pts and 1,470pts today, with support at 1,440pts and 1,413pts.
CGSCIMB said the local benchmark FBMKLCI (KLCI) jumped 10.38pts or 0.72% to end the day at 1,454.44.
Most sectors advanced with utilities (+2.65%), industrial products (+1.10%) and technology (+0.93%) leading the outperformers. The top laggards were healthcare (-0.86%), construction (-0.56%), energy (-0.53%) and plantation (-0.11%).
Trading volume decreased to 4.02bn (down from 4.46bn on Monday) while trading value was relatively unchanged at RM2.85bn (vs. RM2.85bn previously).
Market breadth stayed positive as 535 gainers marginally beat 504 decliners. The benchmark bounced and formed a long white candle yesterday.
Prices also closed above the 20-day again. No change to the current rangebound view for now but another leg up today may send the index to retest the double resistance of the 1,460-1,465 resistance band and the falling trend line from the 1,527 highs.
A close above this 1,465 may see the KLCI move up to test 1,475-1,480 next.
Conversely, if the bearish momentum picks up steam again, then the benchmark may see a retest of the rising 50-day EMA (currently at 1,433) next.
Closing below the said moving average warns that more weakness may follow, targeting 1,403-1,416 next (which includes the double top measurement target). CGSCIMB’s portfolio stays in risk-on mode this week.
