Bursa Malaysia on Friday wrote a finish to the two-day slide in which it had slipped more than 10 points or 0.6 percent.
The Kuala Lumpur Composite Index now sits just beneath the 1,550-point plateau and it’s likely to remain in that neighborhood again on Monday.
At 9.15am, the FBMKLCI dipped -0.18 points to open at 1,548.93.
RHB Retail Research in a note today (Feb 26) said the sideways movement on the FKLI was extended last Friday, and the index closed 3.5 pts higher, at 1,552 pts.
It opened at 1,551 pts that day, then whipsawed between a tight range of 1,554.50 pts and 1,547 pts before closing – thereby printing a narrow body candlestick with long shadows.
The latest price action showed that market sentiment was neutral.
RHB note that the RSI is rounding downwards, which indicates that trading momentum is slowing down.
The FKLI may likely continue to consolidate sideways below the 1,560-pt resistance.
In the event selling activities pick up, the index may pull back towards the 1,515-pt support.
Meanwhile, it is trading above both 20- and 50-day SMA lines.
The SMA lines are trending higher now, showing that the underlying trend remains bullish.
Despite the consolidation, the technical setup favours the bulls – which rationalises the house continued bullish bias.
Traders should remain in the long positions initiated at 1,455 pts, or the close of 3 Nov 2023. To minimise the trading risks, the stop-loss has been revised to 1,500 pts from 1,450 pts.
The immediate support levels are at 1,515 pts, then 1,500 pts. Conversely, the nearest resistance is pegged at 1,560 pts, followed by the 1,600-pt level.
Malacca Securities (MSSB) said the FBMKLCI (+0.23%) ended higher, in line with the positive performance in the regional stock markets, boosted by Utilities heavyweights.
On the broader market, the Utilities sector (+3.14%) was the leading sector, while the Healthcare sector (-1.43%) declined, dragged by selling pressure in selected glove counters.
The Day Ahead
The FBMKLCI ended on a positive tone last week as the results released from YTL-related were fairly above market’s expectations, translating to further buying support in the Utilities sector.
Meanwhile, the US stock market traded mixed for the session as the Technology sector took a breather following Nvidia’s results.
Several events that the market may be monitoring this week include (i) US GDP, (ii) Core PCE, (iii) unemployment claims and (iv) US Manufacturing PMI data.
Closer to home, buying interest should be sustained, following last week’s momentum as we enter the full-blown corporate earnings season this week.
On the commodity market, the Brent oil price traded around USD81/bbl.
Sectors focus: Still, the traders may continue to chase into the Utilities sector as YTLs are deemed attractive in terms of their valuations.
Meanwhile, MSSB noticed the Technology sector’s results were slightly positive last week, and they believe it may turn out stronger from 2Q onwards.
Besides, they expect strong set results from TM may provide support towards the Telco sector.
They opine that there might be more earnings surprises from the Consumer and O&G sectors on the back of normalising costs and firmer crude oil price, respectively.
Bloomberg FBMKLCI Technical Outlook
The FBMKLCI rebounded from a 2-day declined. However, the technical readings on the key index were mixed, with the MACD Histogram forming a rounding top formation, while the RSI maintains above the 50 level.
The resistance is envisaged around 1,560-1,570 and the support is set at 1,520-1,530.
CGSCIMB said Asian stocks gained for the fifth straight week, lifted by gains in China and Japan.
The local benchmark FBMKLCI (KLCI) added 3.62pts or 0.23% to end the week at 1,549.11. Week-on-week, the KLCI closed 15.56pts or 1.01% higher.
Most sectors closed in the red despite the KLCI ending higher the day higher.
Utilities (+3.14%), property (+0.40%) and REIT (+0.39%) were among the top gainers.
On the flip side, the largest laggard was health care (-1.43%), plantation (-1.16%) and telecommunications (-1.05%).
Trading volume rose to 4.07bn (up from 3.71bn on Thursday) while trading value climbed to RM3.21bn (up from RM2.58bn previously).
Market breadth turned negative again as 613 decliners beat 448 winners.
The benchmark formed an inside day on Friday, rebounding a tad coming off a couple of days of consolidation from mid-week.
As they mentioned earlier, the pullback is likely to be temporary only.
IF the current rebound is the start of the next wave up, then the KLCI needs to continue to work its way higher in early week.
The index is likely to climb closer towards 1,570-1,583 next.
IF there is no follow-through buying in early week, then look for the current consolidation to continue for another few more days before the uptrend resumes.
The immediate support is now at 1,534-1,538 followed by the rising trend line (currently at 1,532).
Closing below the rising trend line may signal that a deeper correction may be taking place.
Their portfolio stays in risk-on mode this week.
