MARKET REVIEW

Meanwhile, stocks on the local front traded mostly in the negative zone; the FBM KLCI tanked 0.90% to 1,695.37 pts as index heavyweights succumbed to selling pressure dragged by the negative sentiment on Wall Street. There were 497 decliners compared to 319 gainers for the session, accompanied by traded volumes of 2.05bn, worth RM1.94bn. Nevertheless, with the ringgit trading nearer towards RM4.20/USD, most of the export-oriented counters traded actively higher.

Wall Street ended mostly higher after a two-day losing streak led by energy shares on the back of a rebound in oil prices and bargain hunting activities amongst tech giants (FANG), contributing towards a jump in Nasdaq (+0.90%). The S&P500 added 0.30%, while the Dow ended flattish.

TECHNICAL OUTLOOK: KLCI

The FBM KLCI gapped down forming a Doji candle and the MACD Line is hovering below zero; indicating that the trend is negative. Also, both the RSI and Stochastic oscillators have crossed below 50; suggesting that the negative momentum is picking at this juncture. Should there be a downward violation below 1,680, next support will be set around 1,673. However, if the key index breaches above 1,700, next resistance will be located around 1,730.

On the local front, the market sentiment is likely to recover in tandem with Wall Street as most of the tech stocks registered mild gains overnight as well as rebound in crude oil prices could lift the sentiment amongst the oil and gas stocks. The FBM KLCI’s trading range could be expected within 1,673-1,700.

TECHNICAL OUTLOOK: DOW JONES

After falling sharply over the past two trading days, the Dow trended sideways, supporting above the lower band of the upward channel. However, most of the technical indicators are indicating that the negative momentum could remain over the near term. Hence, we believe the Dow may trend sideways with a downward bias move towards 24,135. Nevertheless, the resistance will be located around 25,000-25,113.

We opine that the volatility could remain over the near term with the unsettled grounds on the trade front and investors will be focusing on the upcoming G20 summit, FOMC and the OPEC meeting as the outcome of the events will be affecting markets’ tone significantly. The Dow’s resistance and support will be envisaged around 24,135 and 25,113, respectively.

Source: Hong Leong Investment Bank Research - 22 Nov 2018