Bursa Malaysia has finished lower in four straight sessions, slumping almost 20 points or 1.2 percent along the way.
The Kuala Lumpur Composite Index now sits just above the 1,590-point plateau although it may stop the bleeding on Friday.
At 9.16am, the FBMKLCI dipped -0.27 points to open at 1,593.41.
RHB Retail Research (RHB) in a note today (June 21) said the FKLI extended its correction during Thursday’s session, printing a fifth consecutive bearish candlestick and closing weaker at 1,589.50 pts.
The index started off at 1,597 pts. Initially, it rose to test the 1,601-pt day high.
However, it then shifted to the negative momentum, retracing towards the 1,587.50-pt day low and closing at the abovementioned 1,589.50 pts.
The bears are attempting to breach the 50-day SMA line.
Falling below the medium-term moving average line will strengthen the bearish technical setup and open the door for further downside corrections.
In a typical bearish setup, support tends to be weak.
The RSI is pointing downwards at this time, which suggests the negative momentum is now gaining speed.
As the bearish momentum is still in play, the made no change to the negative trading bias.
They recommended traders maintain the short positions initiated at the close of 19 Jun or 1,597 pts.
To manage the trading risks, the initial stop-loss threshold is set at 1,622 pts.
The immediate support is marked at 1,575 pts and followed by 1,550 pts.
Meanwhile, the immediate resistance is pegged at the abovementioned 1,622 pts – 4 Jun’s close – and followed by the 1,637 pts, ie the high of 20 May.
Malacca Securities (MSSB) said the FBM KLCI (-0.44%) ended lower as investors took the negative cue from the regional markets as China and Hong Kong markets ended lower yesterday.
On the broader market, the Construction sector (-1.50%) was the worst performing sector.
Meanwhile, the Plantation sector was marginally positive at 0.07%.
The Day Ahead
Another down day on Bursa exchange as profit taking activities still persist, but MSSB believed the FTSE rebalancing activities could be the reason for the softer sentiment in the market.
Meanwhile, the US stock markets ended mixed as the market assessed weaker economic data as building permits came in below expectations, while unemployment claims rose more-than-expectations; S&P500 and Nasdaq retreated from record highs led by the Technology sector, while the Dow ended 0.77% higher.
On the commodity markets, Brent oil headed higher above USD85/bbl, while gold price gained momentum above USD2330.
The CPO is still ranging along RM3900-4000.
Sector focus: Overall, the sentiment across the board is negative as sector indices are undergoing consolidation phase.
However, MSSB believed the traders will be monitoring for good entries once it is ripe for a rebound in the Technology sector which will be driven by catalystsccoming from the rising demand for data center, AI and cloud services.
Also, EMS players are likely on traders’ radar due to stronger earnings from VS.
Bloomberg FBMKLCI Technical Outlook
The FBM KLCI index ended lower dipping below the 1,595 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 1,610-1,615 and the support is set at 1,575-1,580.
CGS International (CGS) Asian stock markets finished mixed for the second day in a row amid Swiss National Bank’s rate cut.
The local benchmark FBMKLCI (KLCI) fell for the fourth consecutive session, declining 7.10pts or 0.44% to end the day at 1,592.69.
Most sectors remained in the negative territory barring transportation (+0.15%), plantation (+0.07%) and healthcare (+0.01%).
The top laggards were construction (-1.50%), energy (-1.01%) and utilities (-0.87%).
Trading volume continued to decrease to 5.04bn (down from 5.57bn on Wednesday) while trading value eased further to RM3.43bn (down from RM4.06bn previously).
Market breadth stayed negative as 352 gainers weighed down by 816 decliners.
The benchmark gapped down with its eighth consecutive black candle yesterday.
The 1,590-1,600 levels (including the 50-day EMA) provided some sort of support but can the bulls withstand the onslaught?
The KLCI may extend deeper consolidation from mid-May.
A break below this band would likely see the benchmark fall to test 1,565-1,575 next.
The trend line from the 1,632 high is likely to cap its near-term gains.
The index needs to overcome and close above the trend line (1,613) and 1,622 to confirm the swing up to retest of the 52-week high at 1,632 and beyond is underway.
Their portfolio stays in risk-on mode this week.
However, if KLCI closes below 1,597 by end of today, CGS will revert their portfolio to risk-off mode next week.
