Bursa Malaysia on Tuesday ended the two-day winning streak in which it had collected more than 15 points or 1 percent.
The Kuala Lumpur Composite Index now sits just beneath the 1,495-point plateau and the losses may accelerate on Wednesday.
At 9.15am, the FBMKLCI dipped -1.98 points to open at 1,491.89.
RHB Retail Research in a note today (Jan 17) said the FKLI’s movement experienced a profit-taking yesterday, breaching the 1,500-pt
threshold, marking a 7.50-pt decline, and concluding at 1,496 pts.
This retracement erased half of Monday’s registered gains. Commencing at 1,502 pts, the index’s movement started off with a downwards trajectory, oscillating between a high of 1,506.50 pts and low of 1,493.50 pts, and settling close to the intraday low.
Latest price action signals shortterm weakness, as the FKLI’s movement eyes the 1,470-pt support. The RSI dipped from 70% to around 60%, showing reduced momentum, but the medium-term bullish setup remains intact.
Hence, expect a correction to the 1,470-pt level or 50-day SMA line before resuming a rebound towards the 1,500 pts again. Despite the short-term correction, we make no change to our bullish bias.
Traders are advised to keep the long positions initiated at 1,455 pts, ie the close of 3 Nov 2023. To minimise the trading risks, the stop-loss is fixed at 1,450 pts.
The first support is at 1,470 pts and followed by the abovementioned 1,450 pts. Meanwhile, the immediate resistance has been changed to 1,500 pts – this is followed by 1,530 pts.
Malacca Securities (MSSB) said the FBMKLCI (-0.48%) closed lower in line with the negative performance of the regional markets, led by profit taking in the YTL-related counters.
On the broader market, the Property sector (-2.15%) fell the most due to selling pressure noticed in Dr Yu related counters, followed by the Construction sector (-1.59%).
The Day Ahead
The FBMKLCI traded in a volatile manner around the 1,500 psychological level as the overall market sentiment was spooked by a few of the counters that limit-down throughout the session.
Meanwhile, the US stock markets ended mostly lower on the back of rising US Treasury yield following the comments from one of the Fed’s
officials who commented that the Fed should not rush towards cutting the interest rates.
Closer to home, we believe the trading tone would stay fairly negative as we expect some of the companies that have traded significantly lower could bring more margin calls, thus affecting the overall market sentiment.
On the commodity markets, the Brent oil price continues to trade sideways within the range of USD76-79/bbl.
Sectors focus: Despite the high volatility environment in selected counters, we still expect the overall theme unchanged for 2024, where traders should continue to focus on the potential revival of the KL-SG HSR project, Johor-theme investments as well as the easing of MM2H requirements.
We expect the fundamentally solid companies that are within the Construction, Property, Building Material and Renewable Energy to benefit under this scenario.
Also, we advocate traders to focus on solid fundamental companies in order to withstand the current volatility.
Bloomberg FBMKLCI Technical Outlook
The FBMKLCI retraced after closing higher for 2 consecutive days. The technical readings on the key index were however mixed, with the MACD Histogram extending a negative bar, while the RSI maintains above the 50 level.
The resistance is envisaged around 1,510-1,520 and the support is set at 1,470-1,480.
CGSCIMB said most Asian stock markets finished in the red on Tuesday ahead of the release of China key economic data (ie. China’s GDP, industrial production and retail sales data).
The local benchmark FBMKLCI (KLCI) followed suit, falling 7.24pts or 0.48% to end the day at 1,493.87. Most sectors fell into negative territory with property (-2.15%), construction (-1.59%) and energy (-0.90%) leading the laggards.
The only outperforming sectors were telecommunications (+0.25%) and healthcare (+0.21%). Trading volume boosted to 5.84bn (up from 4.98bn on Monday) while trading value improved to RM3.59bn (up from RM3.13bn previously).
Market breadth turned negative as 324 gainers weighed down by 775 decliners. The benchmark pared gains and formed a black candle yesterday with profittaking activities took place across the board.
The bulls took a breather from the 13-month high. We reckon that the index is likely to trade in a sideways manner (further consolidation) first before further upside takes place next.
The 1,500-1,510 band acts as the immediate resistance for now. A breakout and a close above this band may take prices up towards the 1,521-1,527 levels next.
We do not foresee a move below the 1,477 or 1,470 level but if the KLCI does so, then the immediate term outlook would turn slightly negative. Our portfolio stays in risk-on mode this week.
