The FBMKLCI continued to drop by 5.14pt to close at 1,775.57 yesterday. Meanwhile, Asian shares retreated as crude oil tumbled into a bear market on concerns that a global supply glut will persist. The FBMKLCI’s top gainers were Petronas Dagangan (+2.3%), MISC (+0.94%) and Hong Leong Financial Group (+0.93%), while the top losers were British American Tobacco (-2.6%), YTL Corporation (-2.0%) and Genting Malaysia (-1.6%). In the broader market, losers outpaced gainers 631 to 284 with 357 counters unchanged. Turnover was 1.69b shares valued at RM2.41b.

From the technical perspective, the “spinning top” pattern appeared again in the daily candlestick chart yesterday. With the index trading slightly below the 1,800 psychological level, we expect this immediate support level to be tested in the near term. Violation of this level may push the index lower towards the next support level of 1,760. The RSI line continued to slide lower, suggesting an increase in selling pressure ahead. Although our long-term outlook remains positive, we do not expect the overall long-term ride to be easy given our negative short-term outlook. Support and resistance levels are as follows:

• Support: 1,760,1,742
• Resistance: 1,800, 1,825

US stocks closed mixed on Wednesday, pressured by a third-straight day of falling oil prices which weighed on the broader market while an unexpected uptick in US existing home sales failed to lift sentiment. The DJIA fell 0.27% to close at 21,401.85. The S&P 500 closed 0.06% lower while the Nasdaq Composite rose to 6233.95, up 0.74%. Declining issues outnumbered advancing ones on the NYSE by a 1.70-to-1 ratio; on Nasdaq, a 1.04-to-1 ratio favoured decliners.

Source: UOB Kay Hian Research - 22 Jun 2017