Market review

• Despite the positive tone on the overnight Wall Street as the Dow traded towards the 20,000 level, Asia benchmark indices trended mixed as Japan Nikkei 225 fell 0.26%, but Shanghai Composite Index and Hang Seng Index added 0.37% and 0.40% - the latter snapped a four-day losing streak. Meanwhile, MXAP Asia Pac slipped marginally by 0.04 pts or 0.3% to 135.28 pts.

• Tracking Dow’s all-time-high position, the FBM KLCI opened green. However, buying support fizzled and selling pressure regained traction after the trading break to end weaker at 1,629.59 pts (-4.93 pts). Overall market volumes stood at 1.16bn, which was lower compared to the 3-month average volumes of 1.47bn. Nevertheless, O&G stocks such as SKPETRO (+7.0 sen) and DAYANG (+5.5 sen) were seen actively traded in the green territory.

• US equities were seen hesitating to move higher after marking fresh all-time-high; the Dow flirted around the 20,000 psychological before the key index ended lower at 19,941.96 pts (-32.66 pts). Also, Brent crude oil stood at US$54.46 (-US$0.89), while Dollar index slipped 0.29 pts to 103.00 pts.

Technical view

KLCI formed a bearish engulfing bar

• The MACD Indicators are turning negative, while the RSI is hovering below the 50 level. Also, the FBM KLCI has breached below the 1,630 level, forming a bearish engulfing bar on the daily chart. Next support may be located around the 1,620 level.

Market outlook

• On the oversea markets, investors' trading activities were seen cautious as the 20,000 psychological level on the Dow is monitored closely. Also, with the stochastic indicating an overbought position, the Dow may enter the short term pullback phase once it breaches the 10-d SMA, with the next support located around the 19,500-19,600 levels.

• Meanwhile, with the FBM KLCI formed a bearish candle, coupled with the weaker Ringgit, we continue to think that the prevailing softer sentiments could limit strong market gains as investors may adopt quick profit taking activities today. Also, selective O&G stocks could be due for short term profit taking after a run-up yesterday.

Source: Hong Leong Investment Bank Research - 22 Dec 2016