The FBM KLCI closed down by 0.36%, pressured by selling in YTL-related counters.
Malacca Securitieees (MSSB) said in a note today (Aug 21) said that meanwhile, regional markets were mixed as investors awaited further clues on potential rate cuts at the upcoming Jackson Hole meeting this Friday.
At 9.15am, the FBMKLCI dipped -1.71 points to open at 1,641.72.
The Utilities sector (-2.80%) was the most lagging sector for the session.
RHB Retail Research (RHB) said the FKLI underwent mild profit-taking yesterday, inching 3.50 pts lower and closing at 1,651.50 pts.
On Tuesday, the index began trading at 1,652.50 pts.
It whipsawed between 1,667.50 pts and 1,644.50 pts before closing at 1,651.50 pts.
The latest session saw the index printing a Doji with “long upper shadow”, confirming a strong resistance has formed at the 1,670-pt level.
For the immediate sessions, the index will likely move sideways below this immediate resistance.
Meanwhile, both the 50- and 200-day SMA lines continue moving upwards, lending support for the bullish technical setup.
Post consolidation, they expected the index to stage a fresh attempt to cross above the 1,670-pt resistance level.
During this consolidation phase, RHB said they will hold on to the positive trading bias.
RHB advised traders to maintain the long positions initiated at 1,565.50 pts (close of 6 Aug).
To mitigate the trading risks, the stop-loss threshold is set at 1,600 pts.
On the downside, the immediate support remains unchanged at 1,620 pts, followed by 1,600 pts.
Conversely, the nearest resistance stays at 1,670 pts, followed by 1,700 pts.
The Day Ahead
Stocks on the Bursa Exchange were mixed, with only a few sectors like Banking, REITs, and Healthcare trading higher.
MSSB noted that meanwhile, on Wall Street, the Nasdaq and S&P 500 retraced, snapping an 8-day winning streak, while the Dow closed slightly lower due to profit-taking ahead of the Jackson Hole Conference this Friday.
They believed overall sentiment may weaken for stocks that rallied significantly in 1H24, as the market might consider their valuations overstretched ahead of earnings releases.
In the commodity markets, Brent oil declined further due to softer demand from China and fading geopolitical tensions, while gold prices remained above USD2,500 ahead of the FOMC meeting.
CPO prices continued to trend sideways around RM3,700.
Sector Focus: With the slight pullback on Wall Street, profit-taking may extend to local Technology stocks.
Additionally, the strong ringgit could dampen interest in local tech companies.
However, attention may shift to the Consumer, Building Material, Construction, Property, Renewable Energy, and Shipping sectors, given expectations of steadier earnings ahead of corporate results.
Besides, MSSB said that the Monkeypox situation may be monitored for potential trading opportunities within Healthcare stocks.
Bloomberg FBMKLCI Technical Outlook
The FBM KLCI index ended lower towards the 1,642 level.
However, the technical readings on the key index were positive with the MACD histogram forming another positive bar and the RSI continues to trend above 50.
The resistance is envisaged around 1,657-1,662 and the support is set at 1,622-1,627.
Maybank Investment Bank (Maybank) said the KLCI snapped a seven-day winning streak as profit-taking intensified.
Selling was broad-based, and only three sectors – Finance, REIT and Healthcare – ended higher yesterday.
At day’s end, Maybank noted that the KLCI fell 5.93pts, or 0.36%, to close at 1,642.77pts.
Leading the decliners were YTL, YTLPOWR and CIMB.
Market breadth was negative, with losers outnumbering gainers by 856 to 356.
A total of 4.20b shares worth MYR4.55b changed hands.
Yesterday’s correction could be temporary, as the KLCI remains above its key SMAs.
That said, volatility will remain elevated during earnings season.
The market will also pay attention to the Jackson Hole symposium this Friday, where Jerome Powell is expected to provide insights on a potential rate cut.
Technically, they expected the benchmark index to range between 1,635pts and 1,655pts today, with supports at 1,638pts and 1,623pts.
CGS International (CGS) said most Asian stock markets closed up yesterday, continuing its positive trend from last week.
However, the local benchmark FBMKLCI (KLCI) eased 5.93pts or 0.36% to end the day at 1,642.77.
Most sectors ended lower with utilities (2.80%) leading the pack, followed by energy (-1.57%) and technology (-1.54%).
Only financial services (+0.47%), REIT (+0.18%) and healthcare (+0.09%) closed in the black.
Trading volume climbed to 4.20bn (up from 3.90bn previously) while trading value rose to RM4.55bn (up from RM4.30bn previously).
Market breadth turned negative positive as 357 gainers lost out to 857 decliners.
The benchmark gapped up for the fifth day in a row, but the buying momentum could not be sustained, forming a candle with a long upper wick.
CGS thought that it is still too early to judge if a top is in place.
For now, they reckoned that the benchmark is likely just taking a short breather.
Strong support is seen at 1,614-1,624 followed 1,593-1,598 next.
The next potential targets for the KLCI are 1,664 (1.382x) and 1,680 (1,618x) once the current consolidation ends.
Their portfolio is reverted to risk-on mode this week.
