Technical view

KLCI may consolidate in near term as indicators are turning weaker

• The daily MACD Histogram has extended another red bar and the MACD Line is hovering below zero. Meanwhile, the RSI and Stochastic oscillators are trending lower - indicating that the momentum is weaker compared to the previous trading day. Hence, we may see the FBM KLCI to trend around the 1,630 level with upside limited around 1,640-1,644.

Market outlook

• Wall Street could trend within the range of 19,700-20,000 on the back of year-end window dressing activities, coupled with the anticipation that the Trump policies will be positive for the US economy. Meanwhile, if KLCI is supported above the 1,630 level, we may see buying support regaining momentum over the near term. Also, oil and gas related stocks should be in traders’ radar as Brent crude oil prices is holding above US$55 per barrel mark.

• Trading buy-FLBHD. We expect a strong FLBHD's 4Q16 results, underpinned by weakening RM/US$, ongoing efforts to improve quality and operational efficiencies and stabilizing ASPs. Moreover, there is a potential final dividend poser amid stronger 4Q16 and solid balance sheet with net cash of 85 sen. The positive downtrend line breakout yesterday should spur share prices to retest RM1.73-1.95 zones. Key supports are RM1.50-1.56. Cut loss at RM1.48.

Source: Hong Leong Investment Bank Research - 20 Dec 2016