Bullish Sentiment Strengthens Amid Consolidation Phase

The FKLI staged a rebound during Thursday’s session, rising 4 pts to close at 1,616.50 pts – still posing a bullish technical setup.

At 9.18am, the FBMKLCI rose +3.07 points to open at 1,615.97.

RHB Retail Research (RHB) in a note today (June 7) said the index started off trading at 1,612.50 pts. It then touched the 1,621 pts intraday high before closing at 1,616.50 pts. The latest price action suggests the bulls are growing stronger and the correction is taking a pause.

At this juncture, strong support has formed at the 1,600-pt level.

The index is likely to consolidate sideways, eyeing to break past the 1,618 pts resistance to resume the upside movement.

RHB observed the RSI is moving sideways, echoing the index is still undergoing consolidation phase. Pending a bullish breakout upon the 1,618-pt resistance mark, they retain the positive trading bias.

RHB advised 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 set at 1,600 pts.

The nearest support locates at 1,600 pts while the lower support is at 1,575 pts. On the upside, the immediate resistance is eyed at 1,618 pts – 24 Mar’s close — followed by the higher resistance of 1,637 pts (20 May’s high).

Malacca Securities (MSSB) said the FBMKLCI (+0.39%) ended higher as the index was lifted by buying interest in selected utilities and consumer products heavyweights, in line with the overnight performance of NVIDIA which may have supported the AI theme in Malaysia.

Meanwhile, the Utilities sector (+3.48%) was the leading sector.

After a volatile move in the past few sessions fluctuating between the negative and positive territories, the FBMKLCI has finally stabilised above the 1,600 with the help from Utilities heavyweights.

Meanwhile, the US stock markets traded mixed ahead of the jobs report that will be released later today.

Nevertheless, they believed the traders and investors could be reassessing the corporate earnings and position for trading opportunities in the second half of 2024.

On the commodity markets, Brent oil had rebounded following interest rate cuts actions by Canada and Europe, despite EIA indicating that the US oil inventories had risen last week, while the FCPO gained momentum overnight above the RM4,000 level.

For gold, it has started to climb with the expectation of a potential earlier interest rate cut by the Fed.

Sectors focus: Still, the data center, AI and cloud services themes are materialising amongst stocks within the local front and we believe the Technology sector’s earnings have bottomed out and could translate to stronger price movements going forward.

They believed the traders could focus on industry includes the HDD, hardware suppliers, cyber securities and EMS.

Besides, there might be spillover effects towards stocks within the Construction, Property and Utilities sectors amid rising data center investments from MNCs on the local front.

Bloomberg FBMKLCI Technical Outlook

The FBMKLCI index ended higher returning briefly to the 1,615 level. The technical readings on the key index were mildly positive with the MACD Histogram extending a less negative bar, while the RSI maintains above 50.

The resistance is envisaged around 1,630-1,635 and the support is set at 1,595-1,600.

CGS International (CGS) said most Asian stock markets finished higher on Thursday except for China and Thailand.

The local benchmark FBMKLCI (KLCI) climbed 6.20pts or 0.39% to end the day at 1,614.73. All sectors closed positive barring plantation (-0.34%) and telecommunications (-0.07%). Utilities (+3.48%), property (+1.66%) and healthcare (+1.58%) were the leaders yesterday.

Trading volume rose to 5.35bn (up from 4.28bn on Wednesday) while trading value increased to RM4.50bn (up from RM3.40bn previously).

Market breadth turned positive once more after 770 gainers beat 475 decliners.

The benchmark formed an inside day, which signals indecision by the market.

After 2 days of consolidation, CGS thought that the benchmark is ready to resume on its uptrend. On the downside, they expected the KLCI to be supported by the 20-day EMA and the 1,590-1,600 level.

A move above 1,622 ought to put the index on course for a retest of the 52-week high at 1,632. The immediate resistance stays at 1,620-1,625 and the following resistance band is at 1,642-1,646. Their portfolio stays in risk-on mode this week.

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