Bursa Malaysia has alternated between positive and negative finishes through the last six trading days since the end of 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 1,540-point plateau although it’s expected to rebound again on Monday.
At 9.15am, the FBMKLCI rose +0.23 points to open at 1,539.10.
RHB Retail Research in a note today (Mac 4) said the FKLI underwent a strong correction on the first trading session of March, plunging 35.50 pts to close at 1,518.50 pts.
The index opened at 1,536.50 pts. After printing the day’s high of 1,543 pts, it retraced to the day’s low of 1,516.50 pts before the close.
The latest bearish price action, coupled with the RSI rounding downwards, shows that the negative momentum is picking up speed now.
Expect negative price action to follow through in the coming sessions.
However, since the bullish structure remains intact, the 50-day SMA line should provide a buffer towards the downside.
Furthermore, expect the bulls to stage a rebound near the 1,500-pt support.
As long as the 1,500-pt level remains intact, we will maintain a bullish bias.
The house recommend that traders maintain the long positions initiated at 1,455 pts, or the close of 3 Nov 2023.
To manage the downside risks, the stop-loss is set at 1,500 pts.
The nearest support is at 1,515 pts, followed by 1,500 pts.
On the other hand, the nearest resistance has been changed to 1,543 pts – 1 Mar’s high – followed by 1,563 pts ie the high of 28 Feb.
Malacca Securities (MSSB) said the FBMKLCI (-0.86%) ended lower, despite the positive performance in the regional stock markets, dragged by Banking heavyweights.
On the broader market, the Plantation sector (+0.41%) was the leading sector, while the Construction sector (-2.68%) declined.
The Day Ahead
After the corporate earnings season, and the FBM KLCI hitting the resistance along 1,559 last week, profit taking activities have emerged after the MSCI rebalancing activities.
Meanwhile, on Wall Street, the 3 major indices have surged again; the S&P500 rose towards new highs after the Core PCE data came in within expectations and investors were focusing on the AI trend and sustainable earnings going forward.
They believe the positive sentiment may spillover towards stocks on the local front this week.
On the commodity market, the Brent oil price turned higher above USD83/bbl ahead of the OPEC meeting this week, while the Gold price has experienced a solid breakout above USD2050 after softer factory sector output.
Sectors focus: This week, we expect traders to look at the commodities sectors after a firmer trend on Brent oil and Gold prices; the O&G may continue to charge higher, while Gold-related stocks may trend positively this week.
Also, the Plantation sector may ride higher in tandem with the FCPO price hitting the RM4000 range.
Meanwhile, they like the Furniture sector in view of the weak ringgit position – LIIHEN’s prospective dividend yield stood more than 6%.
Bloomberg FBMKLCI Technical Outlook
The FBMKLCI ended lower after hitting resistance along 1,559 level.
The technical readings on the key index were mixed, with the MACD Histogram extending another negative bar, while the RSI has declined below 70.
The resistance is envisaged around 1,545-1,555 and the support is set at 1,520-1,530.
Kenanga Investment Bank Berhad (Kenanga) said the FBM KLCI was mostly lower last week due to profit-taking following recent gains and was also in line with the downbeat performance in the regional markets.
It closed -0.72% WoW (or 11.09 points) to 1,538.02 on last Friday.
Weekly volume jumped to 22.5b shares worth RM19.6b vs 11.8b shares worth RM12.2b a week ago.
This week, with limited significant US corporate and economic data, the local market is poised for a continued pullback after recent strong gains.
The lacklustre 4QCY23 corporate earnings reporting season contributed to this outlook.
Additionally, Bank Negara Malaysia is expected to release its monetary policy statement and overnight policy rate (OPR) decision on Thursday, with widespread anticipation for the OPR to remain at 3%.
Technically, the FBM KLCI’s bullish outlook remains strong, highlighted by its position above the critical 1,510 level coinciding with its 200-week SMA—a key factor for its positive trend.
However, a short-term pullback to the 1,527 level is expected before the index resumes its upward movement.
This view is supported by the reversal signals from the oversold stochastic and Smart MCDX indicators, indicating a near-term correction.
All in, Kenanga anticipates the short-term pullback to extend into this week, with immediate support at the 1,527 level, indicative of the previous upward trend’s peak, and subsequent support at 1,510.
On the flip side, the key resistance levels are set at 1,544 and 1,559.
CGS International said Asian stock markets closed mixed on Friday while both Japan’s Nikkei 225 (+1.90%) and Australia’s ASX 200 (+0.61%) finished at record highs.
The local benchmark FBMKLCI (KLCI) retreated 13.42pts or 0.87% to end the day at 1,538.02.
Week-on-week, the index lost 11.09pts or 0.72%. Most sectors dipped in the red for the day barring plantation (+0.41%) and healthcare (+0.18%).
The underperforming sectors included construction (-2.68%), energy (-1.63%) and property (-1.31%).
Trading volume dropped to 4.82bn (down from 5.34bn on Thursday) while trading value fell to RM3.09bn (down from RM7.01bn previously).
Market breadth remained negative for a sixth consecutive day with 396 gainers against 679 decliners.
The benchmark formed a long black candle last Friday as profit-taking activities continued from the 1,559 high.
The KLCI also closed below the support trend line from the 1,446 low, possibly indicating that the index may require a deeper consolidation following the good performance for the first 2 months of 2024.
The last line of defense for the bulls is at 1,534-1,538.
The flattening 20-day EMA (currently at 1,534) acts as the following support, followed by 1,521 next.
On the upside, the next wave up is likely to take the index closer to the 1,570-1,583 levels IF the bulls manage to breakout of its 2-weeks long sideways consolidation.
Their portfolio stays in risk-on mode this week.
