Bursa Malaysia May End Losing Streak On Monday

Bursa Malaysia has moved lower in three straight 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 find support on Monday.

At 9.18am, the FBMKLCI rose +2.05 point to open at 1,602.30.

RHB Retail Research in a note today (May 13) said on Friday, the FKLI paused its pullback, edging up 3 pts to close at 1,605 pts.

This shows the  consolidation phase remains ongoing.

The index opened trading at 1,603 pts and surged towards the 1,609 pts day’s high, before retreating to settle at 1,605 pts by the day’s end.

This pause in the recent pullback indicates that the overall correction is still underway, with a likelihood of resuming its pullback – potentially capped at 1,575 pts.

This view is supported by the RSI at 67%, nearing overbought territory, which points to a momentum retreat in the near-term before potentially accelerating later.

Despite this short-term correction, the medium-term outlook remains bullish as the index continues to trade above both the ascending 50- and 200-day SMA lines.

Based on this medium-term perspective, their bias remains bullish.

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 (-0.03%) ended flat as investors may believe the index is overbought and diverted buying interest into small and mid-cap stocks instead while waiting for the next catalyst.

On the broader market, the Healthcare sector (+1.71%) was the leading sector, while the Utilities sector (-0.60%) declined.

The Day Ahead

The FBMKLCI pulled back for the third session in a row as profit taking activities emerged within the selected heavyweights, but the FBM Small Cap managed to change towards a fresh 52 week high.

Over in the US, Wall Street ended mixed on Friday, but closed significantly higher for the week as weaker consumer sentiment has re-ignited the expectations of earlier interest rate cuts by the Fed in 2024.

This week, inflation data like CPI, PPI, jobs data, industrial production and retail sales will be focused.

On the commodity markets, Brent oil has traded below USD83 amid demand concerns, while the gold price trended positively due to interest rate cut hopes.

Meanwhile, the FCPO still trades within the range of RM3,800-3,900.

Sectors focus: With the market sentiment remaining bullish last week, they expect buying interest will continue this week.

They expect the Technology sector to remain attractive on the back of relatively positive earnings guidance from the US corporates, while the domestic catalysts will include the KL20 summit, higher demand and investments into data centers and AI-related activities in Malaysia.

Besides, they believe the Construction, Property, Utilities, Building Material and Consumer will be decent for trading in the near term.

Bloomberg FBMKLCI Technical Outlook
The FBMKLCI index ended mildly lower consolidating around the 1600 level. The technical readings on the key index were still 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) said most Asian stock markets rebounded on Friday. Hong Kong’s HSI (+2.30%) led the gains on local authority’s support for the capital markets.

The local benchmark FBMKLCI (KLCI) inched lower by 0.55pts or 0.03% to end the day at 1,600.67.

Week-on-week, the index rose 11.08pts or 0.70%. Healthcare (+1.71%) was the best performing sector for the day, followed by
telecommunications (+0.70%) and transportation (+0.46%). Top laggards were seen in utilities (-0.60%), plantation (-0.51%) and energy (-0.35%).

Trading volume eased to 4.62bn (down from 4.65bn on Thursday) but trading value increased to RM3.27bn (up from RM3.14bn previously).

Market breadth stayed positive as 601 gainers outweighed 538 losers.

The benchmark continued to consolidate its previous gains from the rally to its new 2-year high recently.

Expect further profit-taking activities on the horizon as the bulls try to find their footing near the ‘peak’.

Support is likely to be found within the 1,582-1,591 levels if a pullback takes place in the near term.

The following support is at 1,565. On the upside, they do not expect the index to take out the strong resistance at 1,620-1,625 anytime soon, at least not without a slightly deeper consolidation.

Their portfolio stays in risk-on mode this week.

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