Little Movement Anticipated For Bursa Malaysia

Bursa Malaysia has finished lower in five straight sessions, slumping more than 20 points or 1.2 percent along the way.

The Kuala Lumpur Composite Index now sits just above the 1,590-point plateau and it’s likely to hover in that neighborhood again on Monday. 

At 9.16am, the FBMKLCi dipped -0.50 points to open at 1,589.87.

RHB Retail Research (RHB) in a note today (June 24) said the FKLI attempted to find a support point near the 50-day SMA line after rising 2.50 pts on Friday to close at 1,592 pts.

That day, it opened at 1,589.50 pts, climbed to the day’s high of 1,600 pts before profit-taking dragged it down in the afternoon to its close.

The latest positive price action saw the index attempting to close above the 50-day SMA line (1,592 pts).

In the event it stays above the medium-term moving average line, it may test the 20-day SMA line.

However, falling below the 50-day SMA line would dent market sentiment and lead to a correction.

Meanwhile, the RSI continues to point south, ie the bears are still in play.

Since falling below the 1,600-pt level, the FKLI has been charting a series of “lower lows”.

Premised on the bearish momentum, they made no change to their negative trading bias.

RHB advised traders to keep the short positions initiated at the close of 19 Jun or 1,597 pts.

To mitigate the trading risks, the initial stop-loss threshold is set at 1,622 pts.

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

On the other hand, the immediate resistance is pegged at 1,622 pts – 4 Jun’s close – followed by 1,637 pts or the high of 20 May.

Malacca Securities (MSSB) said the FBM KLCI (-0.15%) ended lower as the index was dragged by selling pressure in the Banking and Telco heavyweights on the FBM KLCI rebalancing day.

Also, investors could be staying cautious as the regional markets ended in the red, tracking the NASDAQ’s weaker performance.

The Day Ahead

The Bursa exchange ended the week on a mixed note with the FTSE rebalancing activities taking place.

However, MSSB observed that FBM70 and FBM Small Cap managed to rebound.

Similarly, on Wall Street, trading activities were mixed on the triple witching day and S&P500 and Nasdaq ended lower led by Nvidia.

However, economic data such as the Flash manufacturing and services data as well as existing home sales came in better-than-expectation.

After the rebalancing activities, they believed their stock markets will turn positive with the emergence of bargain hunting activities.

On the commodity markets, Brent oil and gold have retraced below USD85 and USD 2330 after the USD rebounded on the back of better economic data, while CPO price closed at RM3900.

Sector focus: They believed the overall sentiment will turn positive with the help in the Technology sector on the back of rising demand from the data center, AI and cloud services catalysts.

Meanwhile, they liked the EMS players following a good set of results from VS and SKPRES last month.

Besides, they expected healthy earnings to be recorded in the shipping and logistics sector following the fare hike since the Red Sea incident.

Bloomberg FBMKLCI Technical Outlook
The FBM KLCI index ended lower dipping to the 1,590 level.

The technical readings on the key index were negative with the MACD Histogram forming another negative bar, while the RSI dropped below 50.

The resistance is envisaged around 1,605-1,610 and the support is set at 1,570-1,575.

CGS International (CGS) said Asian stock markets finished the week lower with Philippines’ PSEi (-2.93%) leading the losses.

The local benchmark FBMKLCI (KLCI) fell for the fifth consecutive session, reducing 2.32pts or 0.15% to end Friday at 1,590.37.

Week-on-week, the index tumbled 16.95pts or 1.05%.

A few sectors rebounded on Friday led by construction (+0.69%), consumer products (+0.39%) and plantation (+0.29%).

On the flip note, energy (-1.07%), healthcare (-0.54%) and telecommunications (-0.26%) were the top laggards.

Trading volume increased to 5.83bn (up from 5.04bn on Thursday) while trading value jumped to RM6.06bn (up from RM3.43bn previously).

Market breadth turned slightly positive as 600 gainers marginally beat 586 decliners.

The benchmark formed a black inverted hammer last Friday and formed its ninth consecutive black candle.

The KLCI also closed marginally below the 50-day EMA.

The 1,590-1,600 levels (which includes the 50-day EMA) provided some support but can the bulls withstand the current onslaught?

The current consolidation from mid-May may extend further if there is a break below this said support band, targeting a retest of 1,565-1,575 next.

The falling 20-day EMA and the trend line from the 1,632 high are the immediate resistance.

Their portfolio has reverted to risk-off mode this week.

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