Bursa Malaysia Poised To Halt Losing Streak

Bursa Malaysia has moved lower in three straight sessions, slipping nearly 25 points or 1.6 percent along the way.

The Kuala Lumpur Composite Index now sits just beneath the 1,480-point plateau although it may stop the bleeding on Friday.

At 9.15am, the FBMKLCI rose +1.19 points to open at 1,480.18.

RHB Retail Research in a note today (Jan 19) said the FKLI’s movement experienced a sharp 8.50-pt decline for a third consecutive session yesterday, forming a “Three Black Crows” bearish pattern and closing at 1,482 pts.

It commenced trading at 1,489.50 pts, and fluctuated between 1,498.50 pts and 1,481 pts before settling near the day low at the close.

Latest bearish price action indicates short-term weakness, potentially seeing the index’s movement pullback downwards towards 1,470 pts or close to the 50-day SMA line in upcoming sessions.

Despite the momentum decelerates, the technical setup remains positive, with the FKLI still trades above the 50- and 200-day SMA lines.

Despite the short-term correction, our bullish trading bias is maintained.

Traders are recommended to retain the long positions initiated at 1,455 pts, ie the close of 3 Nov 2023.

To manage the downside risks, the stop-loss threshold is set at 1,450 pts.

The first support is marked at 1,470 pts and followed by 1,450 pts.

The immediate resistance still pegged at 1,500 pts and followed by the 1,530-pt leve

Malacca Securities (MSSB) said the FBMKLCI (-0.81%) closed lower despite the mostly positive performance of the regional markets, dragged by selling pressure in YTL-related and selected banking heavyweights.

On the broader market, both the Utilities sector (-2.26%) and the Construction sector (-2.06%) were the worst performing sectors.

The Day Ahead

The FBMKLCI ended lower for the third session given the market sentiment was affected by margin calls in small cap and lower liners; the FBM Small cap dived 2.07%, while FBM ACE plunged 5.2%.

However, the US stock markets rebounded after the result release from TSMC, where the outlook is positive and projected more than 20% growth amid booming demand for high-end chips used in AI application.

This has caused the jump in Nvidia, AMD, Broadcom and others.

Also, Apple was upgraded to Buy from Hold by BofA. We believe the overall sentiment in the US may spillover towards stocks on the local front after the recent selloffs.

On the commodity markets, the Brent oil price traded slightly higher around USD79, as inventories in the US fell more-than-expected.

Sectors focus: Given the rebound on Wall Street, we expect buying interest to spillover towards stocks on the local front within the Technology sector.

Meanwhile, we expect small cap and lower liners to take further beating in the near term with the negative sentiment across the board.

However, we opine that fundamentally solid companies with the trading catalysts revolving the (i) KL-SG HSR, (ii) Johor-region and (iii) easing requirements of MM2H may be focused.

Bloomberg FBMKLCI Technical Outlook

The FBMKLCI ended lower for the 3rd consecutive days.

The technical readings on the key index were however mixed, with the MACD Histogram extending another
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 1,460-1,470.

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