Bursa Malaysia on Wednesday snapped the four-day winning streak in which it had advanced almost 30 points or 2 percent.
The Kuala Lumpur Composite Index now sits just beneath the 1,605-point plateau and it may extend its losses on Thursday.
At 9.16am, the FBMKLCI rose +1.57 points to open at 1,606.21.
RHB Retail Research in a note today (May 9) said the FKLI bulls are taking a breather after the index broke past the 1,600 pts resistance.
Yesterday, the index started off trading at 1,609.50 pts.
It then whipsawed between 1,617.50 pts and 1,603.50 pts before closing at 1,606 pts – charting a bearish candlestick with “long upper shadow”.
The latest bearish price action, coupled with the RSI in overbought territory, suggest that the index will resort to consolidation.
It will be moving sideways for the coming sessions.
Despite the bullish momentum slowing down, the bulls still possess technical advantage as the index is trading above both the 50- and 200-day SMA lines.
In the event selling pressure increases, the index may find support at the 1,575-pt level.
During this consolidation phase, RHB makes no change to the positive trading bias.
They recommend traders hold on to the long positions initiated at 1,455 pts (the close of 3 Nov 2023).
To minimise the trading risks, the trailing-stop threshold is placed at 1,550 pts.
The first support is marked at 1,575 pts, followed by the lower support at 1,550 pts.
Meanwhile, the first resistance is pegged at 1,650 pts, followed by the higher barrier at 1,700 pts.
Malacca Securities (MSSB) said the FBMKLCI (-0.06%) ended flat due to the gains in SIMEPLT, after the proposed solar project announcement, was offset by the selling pressure in selected banking heavyweights as investors were waiting for fresh leads after the dull
overnight performance on Wall Street.
The Day Ahead
The FBMKLCI has turned negative with the emergence of profit taking activities after a 4-day rally, but the FBM70 managed to charge towards fresh all-time-high.
Meanwhile, in the US, stocks traded mixed as the selected Fed official’s statement was still maintaining a relatively hawkish view as it is believed to take more time than previously thought to lower down the inflation back to the 2% target.
Also, UBER registered an unexpected first-quarter loss that contributed to the softer sentiment for S&P500 and Nasdaq.
On the commodity markets, Brent oil traded along our initial support zone of USD81-83 after EIA reported US oil inventories fell last week.
For the CPO, it could have found support along RM3,800.
Sectors focus: The market could be heading for a healthy pullback after a significant rally over the past two weeks. Nevertheless, there is still buying momentum surfacing within the Technology sector, which is riding on the AI and data center trends.
As the profit taking activities picked up, we believe traders may turn into more defensive sectors like Consumer and Utilities.
Besides, MSSB likes smaller Construction companies in view of potential flow down construction projects going forward.
Other favourable sectors include Properties, Building Material, Shipping and Solar.
Bloomberg FBMKLCI Technical Outlook
The FBMKLCI index ended flat after ascending to a 52-week high. The technical readings on the key index were positive with the MACD Histogram extending another positive bar, while the RSI maintains above 50.
The resistance is envisaged around 1,620-1,625 and the support is set at 1,585-1,590.
CGS International (CGS) said stocks in Asia halted a four-day winning streak as investors’ focus shifted to earnings to back the current climb.
The local benchmark FBMKLCI (KLCI) shed 0.93pts or 0.06% to end the day at 1,604.75. Most sectors ended in the black with FBMACE (+0.95%), plantation (+0.82%), healthcare (+0.65%) and technology (+0.64%) leading the gainers.
On the flipside, laggards were REIT (-0.55%), financial services (-0.28%) and telecommunications (-0.13%).
Trading volume eased a tad to 5.40bn (down from 5.42bn on Tuesday) while trading value fell to RM3.57bn (down from RM3.79bn previously).
Market breadth marginally negative as 571 losers beat 568 gainers.
The benchmark gapped up for the fourth day in a row but alas, the bulls could not sustain the buying momentum.
The KLCI eased a tad to snap its 4 consecutive days of gains but stayed above the 1,600 psychological levels yesterday, forming an inside day pattern.
A close below yesterday’s low of 1,602.29 may kick start further selling pressure in the near term.
Support is likely found within the 1,582-1,591 levels if a pullback takes place in the near term.
The following support is at 1,565. IF there are any residual buying strength left, they do not expect the index to rally and take out the strong resistance at 1,620-1,625 anytime soon.
Their portfolio stays in risk-on mode this week.
