Market review

• Despite the bullish tone on the overnight Wall Street, Asian key indices were mostly lower amid profit taking activities after Donald Trump’s news conference, which did not provide much insight on his economic policies. The Shanghai Composite Index and Hang Seng Index fell 0.56% and 0.46% respectively, while Nikkei 225 plunged 1.19% on the back of strengthening yen.

• However, share prices on Bursa Malaysia managed to trade higher and the FBM KLCI rose 0.15% to 1,677.76 pts and FBM ACE gained 0.90% to 5,170.11 pts. Also, market breadth was positive with advancers led decliners by a ratio of 5-to-3. Overall volumes stood at 2.54bn vs. the three-month average volumes of 1.52bn.

• With investors re-evaluating Donald Trump's speech, Wall Street has taken a short term pullback as he did not reveal much about the economic and fiscal policies, disappointing some of the market participants. The Dow slid 0.32% to 19,891.00 pts led by financial sector ahead of the corporate earnings report. Meanwhile, Brent crude oil rose 1.65% to US$56.01.

Technical view

RSI and Stochastics overbought, FBM KLCI resistance located around 1,690

• The daily MACD Line is still hovering above zero, but the MACD Histogram has turned red. Both the RSI and stochastics oscillators are overbought – suggesting that the FBM KLCI could be due for a pullback phase.

Market outlook

• As the Dow trended sideways near the 20,000 psychological level over the past month, we see little change in the market’s immediate direction with the consolidation spell likely to remain in the absence of fresh significant market catalyst to stir investor interest.

• However, market sentiments on the local front are still positive as FBM KLCI, FBM Small Cap and FBM ACE indices are hovering above the 10-d SMA. Nevertheless, traders might take the opportunity to consolidate the gains after the recent rally amid overbought indicators.

• Closed position: We had closed our position on SUPERMX (3.8% gain) yesterday due to expiry

Source: Hong Leong Investment Bank Research - 13 Jan 2017