The Malaysia stock market has moved lower in back-to-back sessions, slipping almost 10 points or 0.7 percent along the way. The Kuala Lumpur Composite Index now sits just shy of the 1,455-point plateau and it’s expected to open under pressure again on Wednesday.
At 9.21am, the FBM KLCI opened at 1454.82.
RHB Retail Research, in a note today (Sept 6), said the FKLI fell sharply below the 200-day SMA line yesterday, settling 11 pts lower at 1,430.50 pts to test the 1,430-pt immediate support.
On Tuesday, the index began trading at 1,442 pts, touching the high of 1,443 pts before strong selling pressure kicked in. It then retreat towards the low of 1,428.50 pts before the close.
The latest “lower highs” bearish pattern beneath the 200-day SMA line depicts a strengthening bearish setup. The RSI at 45% (in negative territory) suggests a further downside, likely falling below the 1,430-pt immediate support and heading towards the next support at 1,400 pts.
In line with the negative sentiment, RHB maintains a bearish bias and recommends traders retain the short positions initiated at 1,447.50 pts, or 17 Aug’s close.
To mitigate the trading risks, the stop-loss threshold is set at 1,468.50 pts.
The first support remains unchanged at 1,430 pts, followed by 1,400 pts. Towards the upside, the nearest resistance is pegged at 1,450 pts, followed by 1,468.50 pts, which was the high of 1 Aug.
Malacca Securities (MSSB) said the FBMKLCI (-0.54%) ended lower due to selling pressure in selected plantation and financial services heavyweights, coupled with the weaker regional markets. Meanwhile, significant profit-taking in the Property (-2.52%) & Construction (-1.41%) sectors were observed, while the Healthcare sector (+0.79%) rebounded.
The profit taking activities persisted on both the local and global stock markets after a significant rally over the past few weeks. MSSB believes traders may stay cautious as the 10-year Treasury spiked following the jump in oil price (due to supply cuts from Saudi and Russia towards end-December).
With both the Treasury yield and oil price on a rising formation, the market could be expecting that the Fed may stay slightly hawkish in the near term, which may pose downside risk towards the stock markets.
Also, traders may monitor the developments on the 2 Johor by-elections that will be held this weekend.
Commodities wise, the Brent crude oil crossed above the USD90/bbl, while the CPO prices are trading in a pullback phase below RM4,000/MT.
Sector focus: With the anticipation of slightly hawkish tone from the Fed, the overall broader market could take a breather, despite the on-going positive catalysts from the NIMP and NETR blueprints. However, MSSB likes the O&G sector due to the firmer Brent oil prices.
Meanwhile, under this uncertain environment, traders may watch out for value and defensive counters which pay decent dividend yields.
The FBMKLCI had formed a bearish bar after hitting the resistance around 1,460- 1,465 for the third time. The technical indicators are weakening, but staying above the positive region; the RSI is above 50, while the MACD Histogram extended another positive bar.
Resistance is located around 1,465-1,470, while the support is set around 1,430-1,440.
Maybank Investment Bank (Maybank IB) said the FBMKLCI continued to drift lower yesterday in tandem with a mixed performance across the regional equities markets.
At day’s end, the benchmark index fell 7.89pts, or 0.54%, to 1,454.83, led by declines in AXIATA, SIMEPLT, MISC and GENT. Market breadth remained negative as losers outnumbered gainers by 689 to 403.
A total of 4.09b shares valued at MYR2.39b changed hands. Selling pressure is on the rise across the board as traders and investors continue locking in recent gains.
Sharp decline in property stocks saw the index form a bearish reversal pattern while both the construction and utilities sectors continue to trade lower yesterday.
Technically, Maybank IB expects the FBMKLCI Index to range between 1,440pts and 1,460pts today, with supports at 1,440pts and 1,413pts.
