Malaysia stock market on Wednesday halted the two-day slide in which it had fallen almost 10 points or 0.7 percent. The Kuala Lumpur Composite Index now sits just above the 1,460-point plateau although it’s expected to head south again on Thursday.
At 9.26am, the FBM KLCI opened at 1459.88.
RHB Retail Research today (Sept 7) said the FKLI rebounded strongly from the immediate support yesterday, climbing 8.50 pts to settle at 1,439 pts and testing the 200-day SMA line. The index started off higher at 1,431.50 pts, briefly touching the low of 1,429 pts before rebounding strongly for the rest of the session.
It hit the high of 1,442 pts and retracing mildly at the close.
However, it is important to note that despite the rebound above the 200-day SMA line, the index is still following a “lower highs” and “lower lows” bearish pattern.
The short-term rebound might test the immediate resistance at 1,450 pts but is likely to be short-lived. Additionally, the RSI momentum indicator in negative territory at 48% suggests an overall bearish momentum, which may lead to a breach of the immediate support at 1,430 pts.
As such, in spite of the short-term rebound, RHB holds on 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 said 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 FBM KLCI (+0.40%) ended higher, driven by buying support in selected financial and energy heavyweights, despite the softer regional and global markets’ performance. The leading sector was the Energy sector (+1.38%) mainly due to firmer crude oil prices.
After a sharp sell down, buying support re-emerged and we noticed the FBM KLCI rebounded, thanks to the banking and energy index members. Also, MSSB believes the surge in the oil price has lifted the sentiment in Malaysia.
However, with the negative tone on Wall Street following the concerns over a potential hike this year, coupled with the slowdown in manufacturing activities in Germany, profit taking activities may spillover and limits the upside potential on the local front.
Commodities wise, the Brent crude oil stayed firmly above the USD90/bbl level, while the CPO prices continued to consolidate below the RM4,000/MT level.
Sector focus: Despite the weaker performance on Wall Street, the news on the “breakthrough” of 5G processor used in Huawei’s latest smartphone could provide some catalysts towards the technology sector on the local front, especially those
that are linked with China.
Meanwhile, MSSB still favour the O&G sector due to the strong Brent oil prices.
Also, they believe traders may lookout for value and defensive counters under this uncertain environment.
Maybank Investment Bank (Maybank IB) said he FBMKLCI Index advanced yesterday amid emerging interest in bank stocks and bargain hunting across the board.
The performance of regional equities markets was mixed.
At day’s end, the benchmark FBMKLCI index gained 5.79pts, or 0.40%, to 1,460.62, led by advances in MRDIY, MISC, AXIATA and CIMB.
Market breadth turned positive as gainers outnumbered losers by 531 to 458. A total of 4.18b shares valued at MYR2.13b changed hands.
Bullish divergence was spotted in the healthcare sector while the energy sector showed a toppish pattern, indicating a looming correction.
Technically, Maybank IB expects the FBMKLCI Index to range between 1,450pts and 1,470pts today, with supports at 1,440pts and 1,413pts.
