The FBMKLCI (+0.15%) closed slightly higher amid bargain hunting activities after the recent pullback, but remained below 1,450. The Transportation & Logistics sector (+0.35%) gained, while the Telecommunications & Media sector (-0.88%) declined after Astro delivered weaker results.
At 9.05am, the FBM KLCI opened at 1445.55.
RHB Retail Research said today (Sept 27) the FKLI remained above the 200-day SMA line yesterday after posting a movement rebound and closing 4 pts higher at 1,442 pts.
However, it is still trading below the 50-day SMA line, which signals that the downtrend is intact.
The index opened at 1,438 pts, and the FKLI’s movement displayed positive fluctuations between 1,445.50 pts and 1,436 pts – ultimately closing in positive territory.
Despite the rebound, its movement has not crossed above the 50-day SMA line yet or the previous day’s high – indicating a relatively weak rebound. This suggests the overall bearish momentum beneath the 50-day SMA line is still there and RHB anticipates the continuation of the correction in the upcoming sessions – with a breach below the 200-day SMA line – before heading towards the first support level at 1,430 pts.
This will be followed by consolidation with a bearish bias. Combined with a weak RSI, our bearish technical outlook remains unchanged.
Traders should keep to the short positions initiated at 1,447.50 pts, ie 17 Aug’s close. To minimise the trading risks, the stop-loss threshold is fixed at 1,468.50 pts.
The immediate support is marked at 1,430 pts and followed by 1,400 pts. On the upside, the immediate resistance is pegged at the abovementioned 1,468.50 pts – 1 Aug’s high – and followed by 1,500 pts.
Malacca Securities (MSSB) said the FBMKLCI had a slight rebound at the end of the session as bargain hunting activities resurfaced. Meanwhile, Wall Street was significantly lower as investors were concerned that the elevated interest rate environment could dampen the economic outlook. Also, the 10-year US Treasury yield climbed to a fresh 16-year high.
With the Aug new home sales and US Sep consumer confidence index came in below estimates, we believe the overall market conditions may persist in the negative tone, and likely to spill over to stocks on the local bourse.
Commodities wise, the Brent crude oil has rebounded and traded near the USD94/bbl level, while the CPO prices were trading near the RM3,700/MT level.
Sector focus: With the trading environment turning more cautious, we expect selling pressure to build up within the technology stocks, taking cues from Nasdaq overnight negative performance. However, we like defensive sectors such as Utilities that have stable cash flow and dividends.
Meanwhile, traders may continue to position around the mega infrastructure theme within the Construction, Building Material and Property sectors ahead of the Budget 2024.
The FBMKLCI ended higher, but still hovering below the 1,450 psychological level. Also, the technical readings on the key index were negative with the MACD Histogram turning lower and the RSI is below 50. The resistance is located around 1,465-1,470 and the support is envisaged around 1,430-1,440.
CGSCIMB said the local benchmark FBMKLCI (KLCI) managed to gain 2.10pts or 0.15% to end the day at 1,445.55.
It was a mixed day for the sectors with transportation (+0.35%), REIT (+0.28%) and consumer products (+0.24%) leading the outperforming indices. The top laggards were telecommunications (-0.88%), energy (-0.82%) and construction (-0.52%).
Trading volume fell to 3.16bn (down from 3.33bn on Monday) while trading value subdued to RM1.95bn (down from RM2.04bn previously). Market breadth stayed negative as 367 gainers lost out to 564 decliners.
The benchmark closed little change with an inside bar yesterday. Prices sit just above the 200-day EMA but can the moving average hold it up? Price movements suggest that the bears are starting to strut their stuff following the second bearish engulfing pattern in 4 trading days on Monday.
A close below the said EMA may exacerbate the downward pressure on the index, with the KLCI consolidating further in the days ahead, possibly moving lower to retest the 1,430-1,438 band again.
Any rebound is likely to find the falling 20-day EMA providing resistance overhead with the 1,465 level as the critical resistance in the near term. CGSCIMB’s portfolio stays in risk-on mode this week.
