Bursa Malaysia rebounded on Monday, one session after snapping the three-day winning streak in which it had gained almost a dozen points or 0.7 percent.
The Kuala Lumpur Composite Index now rests just shy of the 1,630-point plateau and it's tipped to open in the green again on Tuesday.
RHB Retail Research (RHB) in a note today (July 16) said the FKLI may be undergoing a bullish breakout, and testing the 1,637-pt resistance.
Yesterday, it opened at 1,627 pts. It then rose to the day's high of 1,636.50 pts before closing at 1,634 pts.
The latest session saw the index printing a fresh "higher high" with "higher low".
However, the 1,637-pt resistance remains intact, at this stage.
The RSI is trending higher now, indicating that a bullish momentum is in play.
Therefore, RHB expected a follow-through positive price action, with the index breaching the immediate resistance of 1,637 pts.
The bullish breakout will open the door for an upward movement towards the next resistance at 1,670 pts.
Meanwhile, if traders take profit, the FKLI may retest the 50-day SMA line or the 1,610-pt support.
Pending a bullish breakout, they stuck to a positive trading bias.
RHB recommended that traders maintain the long positions initiated at the close of 4 Jul, ie 1,624.50 pts.
To mitigate the downside risks, the initial stop-loss is set at 1,590 pts.
The nearest support is at 1,610 pts, followed by 1,590 pts.
Towards the upside, the first resistance is marked at 1,637 pts – 20 May's high – followed by 1,670 pts.
Malacca Securities (MSSB) said the FBM KLCI (+0.66%) ended higher as the index was lifted by buying pressure within Financial and Telco & Media heavyweights as the market sentiment improved; tracking the positive sentiment on Wall Street overnight.
The Construction sector (+2.23%) was the best performing sector.
The Day Ahead
The FBM KLCI retested the 1632.79 level intraday but managed to close higher for the session.
Meanwhile, both the FBM70 and FBM Small Cap traded positively as buying interest was observed across most sectors.
Major US indices closed higher, while the Russell2k index surged further after the Fed's comments that the FOMC won't wait for inflation to reach its 2% target before lowering rates.
Investors will be watching US retail sales today, with industrial production data released on Thursday and unemployment claims on Friday.
On the commodity markets, Brent oil trades slightly below USD85 amid demand concerns, while the gold price trades above USD2,420.
The CPO price trades below RM3,900.
Sector Focus: MSSB noted that they have seen more buying interest in smaller-cap construction stocks due to the expectation of more job awards following recent data center investments by MNCs.
They believed spillover buying support could be seen in property, building materials, utilities, and technology stocks.
The recent gazetting of the Cyber Security Act 2024 by the AG's Chambers could boost demand for cybersecurity stocks.
Other favorable segments to monitor include telco and financials.
Bloomberg FBMKLCI Technical Outlook
The FBM KLCI index ended firmly towards the 1,629 level.
The technical readings on the key index were positive with the MACD histogram formed another positive histogram bar, and RSI continues to trend higher above 50.
The resistance is envisaged around 1,644-1,649 and the support is set at 1,609-1,614.