Bursa Malaysia has alternated between positive and negative finishes through the last seven 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 and it’s likely to head south again on Tuesday.
At 9.15am, the FBMKLCI dipped -1.35 points to open at 1,537.92.
RHB Retail Research in a note today (Mac 5) said after undergoing a strong correction earlier, the FKLI consolidated above the 1,515-pt immediate support yesterday, ending neutral at 1,518.50 pts.
The index opened at 1,521 pts and attempted to rebound higher during the early session, reaching a day’s high of 1,529 pts.
It then reversed course, falling below the opening level and hitting the day’s low of 1,517.50 pts before the close.
The neutral close amid the intraday selling pressure suggests that negative momentum remains in play, likely leading to a consolidation near the 1,515-pt support in the coming sessions, with a downside risk towards the critical 1,500-pt support.
This is supported by the weak RSI at the 45% level, ie in negative territory.
However, the medium-term technical setup remains bullish, as the FKLI is still trading above the ascending 50-day SMA line.
RHB expect a rebound near the 1,500-pt support to occur later.
Unless this level is breached, they maintain their bullish bias.
RHB recommend 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 threshold is set at the abovementioned 1,500 pts.
The nearest support is at 1,515 pts and followed by 1,500 pts.
On the upside, the immediate resistance is pegged at 1,543 pts – 1 Mar’s high – and followed by 1,563 pts, ie the high of 28 Feb.
Malacca Securities (MSSB) said the FBMKLCI (+0.08%) ended marginally higher, in line with the positive performance in the regional stock markets, boosted by selected Banking and Utilities heavyweights.
On the broader market, the Plantation sector (+1.00%) and the Construction sector (+1.00%) were the leading sectors.
The Day Ahead
The FBMKLCI is trading within its sideways formation after the February earnings season.
Despite the pullback on the US stock markets, investors were still chasing into the Technology stocks amid the AI-craze and SMCI is added to S&P500.
The latest segment that got a boost is the memory chipmakers where high bandwidth memory solutions will be used in the latest Nvidia’s AI chips.
Given this scenario, the upward tone will persist within the AI-related stocks for the near term.
On the commodity market, the Brent traded sideways slightly below the USD83/bbl level as OPEC and its allies agreed to extend voluntary production cuts until end of June, while the Gold price has surged above USD2100 zone with the anticipation of interest rate cuts by the Fed in 2H2024.
Sectors focus: MSSB expect the broader market could stay muted for the near term in the absence of fresh leads, but commodities sectors such as the O&G, Gold and Plantation sectors may stay stronger in the near term as their underlying commodities prices were traded firmer.
Meanwhile, they like stocks with high net cash and decent dividend yield, within the Furniture, Metal and Technology sector.
Bloomberg FBMKLCI Technical Outlook
The FBMKLCI ended marginally higher, but still within the sideways consolidation phase.
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.
CGS International said tech stocks lifted the Asian stock markets at the start of the week with Taiwan’s TAIEX (+1.95%) leading the gainers.
The local benchmark FBMKLCI (KLCI) added 1.25pts or 0.08% to end the day at 1,539.27.
It was a mixed day for sectors with gainers led by plantation (+1.00%), construction (+1.00%) and property (+0.52%).
Trading volume eased for the second day running, falling to 3.33bn (down from 4.82bn on Friday).
Trading value declined to RM2.56bn (down from RM3.09bn previously).
Market breadth remained negative for a seventh consecutive day with 426 gainers losing out to 536 decliners.
The KLCI tried to rally during the day but the weak close saw the benchmark fall back to the opening price towards the end of the day.
Yesterday’s lack of strength may warn that further consolidation is likely in the near term.
The last line of defense for the bulls is at 1,534-1,538, which includes the flattening 20- day EMA (currently at 1,535).
If this band gives way, then look for the index to fall and retest the 1,508-1,521 levels next.
IF the bulls can muster some strength and take out the recent high, then the index may inch closer to the 1,570-1,583 levels thereafter.
Their portfolio stays in risk-on mode this week.
