Bursa Malaysia has moved higher in six straight sessions, rising almost 40 points or 2.8 percent along the way. The Kuala Lumpur Composite Index now sits just beneath the 1,445-point plateau although investors figure to lock in gains on Monday.
At 9.16am, the FBMKLCI opened +1.58 points higher to 1,445.72.
RHB Retail Research, in a note today (Oct 16), said last Friday, the FKLI closed higher for the fifth consecutive session, climbing 2.50 pts to 1,444.50 pts – while heading for the immediate resistance of 1,450 pts.
It opened at 1,442 pts, fell to the session’s low of 1,437 pts before recouping all intraday losses and rising to print the session’s high of 1,447 pts then closing in positive territory.
The latest bullish candlestick had a fresh “higher low”, which indicates that the bullish momentum is picking up speed. As the RSI has also crossed above the 50% threshold – signalling that a strong momentum is in play now – expect a follow-through price action to test the 1,450-pt resistance.
However, strong selling pressure should emerge between 1,450 pts and 1,468.50 pts. As long as the index remains below the 1,468.50-pt resistance, RHB keeps their negative trading bias unchanged.
Traders should maintain the short positions initiated at 1,447.50 pts (17 Aug’s close).
To mitigate the trading risks, the stop-loss is fixed at 1,468.50 pts. The immediate support has risen to 1,430 pts, followed by the lower support of 1,407.50 pts or the low of 6 Oct.
The first resistance is pegged at 1,450 pts, followed by 1,468.50 pts or the high of 1 Aug.
Malacca Securities (MSSB) said the FBMKLCI (+0.02%) ended flat as investors stayed cautious while digesting the Budget 2024 announcement. The Construction (-0.50%) and Property (-0.58%) sectors reversed earlier gains as profit taking emerged.
The FBMKLCI closed higher for the sixth session prior to the Budget 2024 as investors were anticipating positive catalysts from the event. However, the US stock markets pulled back amid rising geopolitical tension offsetting the stronger-than-expected quarterly earnings from the banking heavyweights.
Given the growing geopolitical uncertainty in the Middle East region, MSSB believes the upside could be limited on the local front. Nevertheless, the traders may focus on the Budget 2024 which may provide trading catalysts at least for the near term.
Commodities wise, the Brent crude oil surged strongly above USD90/bbl after the Middle East tension intensified, while the CPO closed above RM3,700/MT with the improved China demand.
Sector focus: Following the Budget 2024, MSSB expects the traders to focus on the poultry stocks with the intention of removing the price ceiling for chicken and eggs.
Meanwhile, the other beneficiaries include the construction, solar-related, building materials and utilities sectors. Also, with the surge in crude oil prices, the energy sectors will be traded more positively.
The FBM KLCI ended flat, but maintained above the 1,430 level. The technical readings on the key index were more positive with the MACD Histogram extending another positive bar, and the RSI is hovering above 50. The resistance is envisaged around 1,450-1,460 and the support is located around 1,420-1,430.
CGSCIMB said the local benchmark FBMKLCI (KLCI) stayed relatively flat at 1,444.14. Week-on-week, the index surged 27.26pts or 1.92%.
The broader market was in a mixed note with telecommunications (+0.36%), healthcare (+0.25%) and industrial products (+0.23%) leading the gains for the day. The worst performing sectors were property (-0.58%), construction (-0.50%) and utilities (-0.44%).
Trading volume dropped to 3.22bn (down from 3.38bn on Thursday) while trading value eased further to RM1.80bn (down from RM2.03bn previously). Market breadth turned negative as 377 gainers dragged by 488 decliners.
The benchmark formed a white candle last Friday but prices fluctuated within last Thursday’s range. The breakout above 1,438 and the moving averages keep the current positive momentum intact.
The bulls are likely to lay siege on the 1,450-resistance next. A strong breakout may see a move to test the 1,460-1,465 levels thereafter.
The 1,430-1,438 band is now the resistance-turned-support band. A move back below the 1,430 level warns that the index is heading back into consolidation mode.
CGSCIMB’s portfolio is reverted into risk-on mode this week.
