Bursa Malaysia has finished lower in four straight sessions, sinking more than 25 points or 1.7 percent along the way.
The Kuala Lumpur Composite Index now sits just above the 1,540-point plateau and it’s likely to remain in that neighborhood again on Wednesday.
At 9.16am, the FBMKLCI rose +0.84 points to open at 1,535.05.
RHB Retail Research in a note today (Apr 17) said the FKLI breached below the 50-day SMA line yesterday, shedding 9 pts to close at 1,533 pts and emphasising that the correction remains in play.
Despite opening higher at 1,544.50 pts, the index fell sharply throughout the session, hitting the 1,532.50-pt low before the close.
The latest strong bearish candlestick breaching below the 50-day SMA line, supported by the weakening of the RSI at 45% from 50% previously, solidifies the weak momentum to come.
As mentioned in their previous note, since the FKLI now trades below the SMA line, the index may retrace further towards the 1,520-pt support, followed by a consolidation before a possible rebound takes place.
As for now, they maintain their bullish trading bias – unless the FKLI falls below the aforementioned 1,520 pts.
They advise traders to retain the long positions initiated at 1,455 pts, which was the close of 3 Nov 2023.
To minimise the trading risks, the trailing-stop threshold is set at 1,520 pts.
The immediate support is at this 1,520-pt level and followed by 1,500 pts.
Conversely, the immediate resistance is pegged at 1,563 pts, with the higher resistance at 1,600 pts.
Malacca Securities (MSSB) said the FBMKLCI (-0.49%) ended lower, in line with the negative performance across the regional stock markets amid concerns over rising geopolitical tensions and the key index was dragged by Utilities and Banking heavyweights.
On the broader market, the Construction sector (-2.69%) was the worst decliner.
The Day Ahead
The selling pressure continued for the fourth trading day on the FBMKLCI, while the FBM Small Cap pulled back from its 52-week.
Meanwhile, the US stock markets traded flat yesterday after the Fed Chair Powell commented there has been a “lack of further progress” this year on inflation.
MSSB believe the market is pricing in lesser rate cuts for 2024 and contributed to the spike in US Treasury yields.
On the commodity front, Brent oil price continues to trade along USD90/bbl, while the gold price maintained its uptrend move above USD2380 on the back of unresolved tension in the Middle East.
The CPO price traded below RM4100 as the market is pricing in softer demand after Eid al-Fitr festive buying.
Sectors focus: With the mixed trading sentiment on Wall Street, they believe the selling pressure could have been overdone on the local front, and should be due for a rebound.
They think there might be a rebound in the Construction, Property and Technology sector.
Meanwhile, traders could position within Transportation & Logistics companies, while long term investors may look into more defensive
sectors such as Consumer.
Also, they like selected stocks within the Gaming, Solar, Construction and Building Materials sectors.
Bloomberg FBMKLCI Technical Outlook
The FBMKLCI index ended lower for the 4th consecutive day.
The technical readings on the key index were negative, with the MACD Histogram forming a rounding top formation, while the RSI maintains below 50.
The resistance is envisaged around 1,550-1,555 and the support is set at 1,515-1,520.
CGS Inernational (CGS) said selling pressure was seen across Asian stock markets on Tuesday against the backdrop of the strengthening US Dollar.
The local benchmark FBMKLCI (KLCI) fell another 7.53pts or 0.49% to end the day at 1,535.00.
All sectors remained in the negative territory led by construction (-2.69%), property (-2.46%) and energy (-1.71%).
Trading volume jumped to 4.93bn (up from 4.28bn on Monday) while trading value rose to RM3.72bn (up from RM3.25bn previously).
Market breadth stayed negative as 173 gainers were hammered by 1,139 decliners.
The benchmark gapped down once again yesterday, sitting right above the 50- day EMA.
The current break below the 1,537 support may warn that a deeper pullback or a longer-term sideways consolidation is taking place right now.
After 4 consecutive days of selling and an extremely bearish advance/decline ratio, the index is likely due for a rebound today, supported by the trend line from the 1,518 low and the 50-day EMA.
Other support levels are at 1,528 and 1,508- 1,521 thereafter.
Any bargain hunting may be capped at the 1,544 level (20-day EMA).
The bulls must close 2 down gaps in order to retest the 1,559 high followed by 1,570-1,583 next.
Their portfolio stays in risk-on mode this week.
