HLBank Research Highlights

Author: HLInvest   |   Latest post: Fri, 27 Nov 2020, 11:01 AM


Traders Brief - Profit Taking Could Emerge After Filling the Gap (1369-1419)

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Global: Asian markets soared in early sessions, taking cues from the Dow’s 705-pt rally last Friday on gradual easing restrictions and reopen businesses in the US coupled with a cut in key Chinese lending rate for the 2nd time in 2020. However, the gains were mostly wiped off amid sliding oil prices owing to a collapse in demand and a subsequent lack of storage. Overnight, the Dow plunged 592 pts or 2.4% to 23650 as investors watched WTI oil May delivery crashed into unchartered regions, overshadowing optimism about plans for a staggered easing of global lockdowns in the wake of the COVID-19 pandemic. Sentiment was also dampened by a deadlock over potential additional emergency funds for small businesses.

Malaysia: Similarly, KLCI gained 5.8 pts to 1413.2 on profit taking after surging as much as 21.7 pts intraday at 1429. Trading volume decreased to 6bn shares worth RM3.21bn as compared to Friday’s 6.3bn shares worth RM3.02bn. Market breadth remained positive but the G/L ratio of 1.16x (gainers/losers) were substantially reduced compared with 17 Apr (3.6x), 16 Apr (2.46x) and 15 Apr (1.55x).


Following a 49.8-pt weekly surge WoW and a 705-pt rally on Dow last Friday, KLCI rallied as much as 21.7pts to 1429 and successfully refilled the long awaited 1369 -1419 gap (13 Mar), before narrowing the gains to 5.8 pts at 1413.2 yesterday, forming a Gravestone Doji pattern. The Stochastic oscillators is hovering near overbought zones; indicating limited upside for KLCI. Resistances are situated at 1430-1450, while supports is set around 1378-1400 levels.


The overnight slide on Dow and oil prices coupled with technically overbought market are likely to witness KLCI in wild swings today (range bound within 1378-1419 band). We reiterate our view that the recent relief rally would be an opportune time to take profit in this market rally as we roll into May and the economic reality, coupled with the concerns about weaker corporate earnings should start to emerge moving forward.


We had closed our positions for Technical Tracker picks: SCICOM (6.8% gain), KRONO (16% gain), PPHB (7.9% gain) and 2Q20 picks: PHARMA (14.7% gain), UNISEM (13.6% gain), INARI (16.3% gain) and TALIWRK (13.3% gain) after hitting the R1/R2 resistance targets.

Source: Hong Leong Investment Bank Research - 21 Apr 2020

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