Bursa Malaysia: Strong Support At 1,600 Points

Bursa Malaysia has moved lower in back-to-back sessions, slipping almost 5 points or 0.3 percent in that span.

The Kuala Lumpur Composite Index now sits just above the 1,600-point plateau although it may stop the bleeding on Friday.

At 9.15am, the FBMKLCI rose +2.24 points to open at 1,603.46.

RHB Retail Research in a note today (May 10) said the FKLI pulled back for the second consecutive session, falling 4 pts to close lower at 1,602 pts – showing that consolidation is still in progress.

On Thursday, the index started off trading at 1,605 pts.

Initially, it jumped to 1,612 pts. However, strong selling pressure emerged and dragged the index towards the 1,599 pts intraday low before closing at 1,602 pts.

The price action coupled with the RSI indicator suggest the index is consolidating sideways near the 1,600-pt level.

In the event selling pressure increases, the FKLI would retrace towards the 1,575 pts support.

At this juncture, as the index still trades above both the 50- and 200-day SMA lines, the technical setup remains bullish.

They will hold on to the positive trading bias unless the index breaches the 1,550 pts support.

They advise traders to retain the long positions initiated at 1,455 pts (the close of 3 Nov 2023).

To manage the trading risks, the trailing-stop threshold is fixed at 1,550 pts.

The nearest support is marked at 1,575 pts, followed by 1,550 pts.

On the upside, the first resistance is pegged at 1,650 pts, followed by 1,700 pts.

Malacca Securities (MSSB) said the FBMKLCI (-0.22%) ended lower as investors were taking profits while waiting for fresh leads after the dull overnight performance on Wall Street.

On the broader market, the Properties sector (+0.84%) was the leading sector, while the Transportation and Logistics sector (-0.69%) declined.

The Day Ahead
The FBMKLCI has extended its pullback for the second session after hitting the 52-week high recently, while the FBM70 has snapped a 4-day winning streak with the emergence of profit taking activities.

Over in the US, Wall Street gained momentum after the release of weekly jobless claims, which jumped to the highest level since August.

This has boosted the interest rate cuts optimism going forward.

In their view, despite the elevated inflationary pressure, they are anticipating the overall markets to register new heights at least for the near term after assessing the AI driven corporate earnings this quarter.

On the commodity markets, Brent oil rebounded along their initial support zone of USD81-83 amid strong demand and softer dollar.

For the CPO, it continues to trade along the support zone around RM3800.

Sectors focus: Although the market could be retracing in the near term, they believe it is healthy and likely providing a decent entry towards stocks within the Technology sectors.

Besides, they like the recent AI and data center trends that could provide sustainable upside towards the Power and Water industry going forward.

On the potential revival of infrastructure activities, we believe it should benefit the Construction, Building Material and Properties sectors, coupled with the Utilities sector.

Bloomberg FBMKLCI Technical Outlook
The FBMKLCI index ended lower 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 1,615-1,620 and the support is set at 1,580-1,585.

CGS International (CGS) most Asian stock markets finished lower on Thursday with Philippines’ PSEi (-
1.75%) leading the losses.

The local benchmark FBMKLCI (KLCI) erased 3.53pts or 0.22% to end the day at 1,601.22.

Top laggards included transportation (-0.69%), plantation (-0.51%) and telecommunications (-0.34%).

On the gainers front, property (+0.84%), energy (+0.75%) and REIT (+0.37%) were the best performing sectors.

Trading volume fell to 4.65bn (down from 5.40bn on Wednesday) while trading value decreased to RM3.14bn (down from RM3.57bn previously).

Market breadth however turned positive as 601 gainers beat 458 losers.

The benchmark formed its second black candle yesterday following another round of profit taking.

They had previously mentioned that a close below Wednesday’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.

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