Market review

• Most of the Asian stock markets trended higher, tracking the positive sentiments on the overnight Wall Street. The Shanghai Composite Index, Hang Seng Index and MSCI Asia Pac advanced 0.21%, 1.46% and 1.54% respectively. However, Nikkei 225 fell 0.37% as yen strengthened against the US dollar.

• Shares on Bursa Malaysia followed suit as the FBM KLCI rose for the second consecutive day to close higher 1,659.82 pts (+12.35 pts). Market breadth was positive with advancers overwhelmed decliners by a ratio of 3-to-1. Also, FBM Small Cap soared 1.18% to 15,167.80 pts as traders were looking for trading opportunities under the smaller cap stocks.

• US equities trended sideways as sentiments were cautious after the Dollar index fell 1.24%. The Dow fell to an intra-day low of 19,811.12 pts before ended at 19,899.29 pts (-42.87 pts). Meanwhile, Nasdaq, however managed to eke out marginal gains and marked a fresh all-time-high closing at 5,487.94 pts (+10.93 pts).

Technical view

Still trending higher on both MACD and RSI

• For FBM KLCI, the daily MACD Line is trending higher above the zero level, while the MACD Histogram continues with another green bar – indicating that the momentum is intact. The RSI is hovering above 50.

Market outlook

• For Dow, investors may stay cautious ahead after the sharp fall in Dollar index. The Dow may trend sideways over near term with upside to be capped around 20,000.

• On our local front, index heavyweight might be taking a mild consolidation as the FBM KLCI rallied near the 1,660 level. Overall sentiments might favor to the small cap stocks as FBM Small Cap index has surged above 15,000.

• Trading Buy-REACH. The MACD Line crossed above the zero level – indicating share price has potential to trend higher over the mid to long term. Following the continued bullish indicator, we revise our technical target to RM0.735-RM0.765 levels. On the cut loss strategy, we move our trailing stop level higher to RM0.68.

• Trading Buy-EATECH. Prices have formed higher highs and higher lows and experienced a flag formation breakout with increased volumes, investors may take this as an opportunity to accumulate around the RM0.64- RM0.66 levels to enjoy a lower risk entry. Target will be set around the RM0.695, RM0.77 and RM0.835 levels. Meanwhile, support will be pegged around RM0.615 and RM0.63 levels, while cut loss shall be initiated once the price falls below RM0.61.

Source: Hong Leong Investment Bank Research - 6 Jan 2017