HLBank Research Highlights

Author: HLInvest   |   Latest post: Mon, 2 Dec 2019, 9:11 AM


Traders Brief - Profit Taking Activities May Emerge

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Despite sentiment being affected by the recent intensified protest in Hong Kong, Asia’s stock markets ended mostly higher, rebounding from a sharp drop on Monday amid bargain hunting activities. Shanghai Composite Index and Hang Seng Index rose 0.17% and 0.52%, respectively, while Nikkei 225 added 0.81%.

Meanwhile, KLCI managed to return in the positive territory after hovering in the negative region for the first session; the KLCI inched higher by 0.10% to 1,609.73 pts. Market breadth was positive with 416 advancers as compared to 398 decliners. Market traded volumes stood at 2.49bn, worth RM1.82bn. Also, most of the O&G stocks such as Perdana, Wah Seong, Armada and Velesto traded actively higher for the day.

Despite market participants still waiting for more clarity on the mini trade deal between US and China, Wall Street managed to eke our further gains led by Facebook - announcing new payments tool that could be used through its applications and Disney - following the launch of Disney+ streaming service, respectively. The S&P 500 and Nasdaq rose 0.16% and 0.26%, respectively.


Still, the FBMKLCI continues to trend higher but within a tiny range between 1,601-1,614 levels over the past 4 trading days. The MACD Line is trending higher above zero, but the MACD Histogram has turned weaker. Meanwhile, both the RSI and Stochastic oscillators are overbought; indicating that the upside could be limited around 1,620. Support will be set along 1,580.

Without any fresh leads in the markets, coupled with neutral to weaker expectations on the upcoming financial reporting season as well as the overbought situation on the FBM KLCI, we anticipate that profit taking activities may return. Nevertheless, traders may take some opportunities within the O&G stocks amid improved sentiment on energy segment recently following few contracts being awarded by Petronas Carigali since September. Meanwhile, the KLCI is likely to range bound between 1,580-1,620.


The Dow extended its sideways formation over the past four trading days and the MACD Line is hovering above zero, while the MACD Histogram has pulled back mildly. Meanwhile both the RSI and Stochastic oscillators are in the overbought region. Hence, we might be anticipating some profit taking activities to emerge over the near term. Resistance is envisaged around 28,000, while support is pegged along 27,400.

In the US, stock markets have been lifted by positive corporate reporting season where more than 70% of the companies have topped analysts’ expectations, coupled with optimism over the trade front as US and China will be meeting to sign the phase one mini deal over the near term. However, with the overbought status on the Dow, upside could be limited around 28,000 level.

Source: Hong Leong Investment Bank Research - 19 Nov 2019

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