FBM KLCI (Bearish Bias)

• The FBM KLCI advanced by 27.26 points or 1.92% week-on-week, settling at 1,444.14 last Friday. This uptick was influenced by a stronger performance in regional markets, despite escalating tensions in the Middle East. Trading volume in the main market increased to 10.28b shares, compared to 9.65b shares the previous week.

• Although the FBM KLCI broke through significant resistance markers at 1,427 (corresponding to the 61.8% Fibonacci retracement) and 1,434 (aligned with the 13-week SMA), the current geopolitical volatility and the absence of notable highlights in the recently announced 2024 budget could restrain further upward movement. Moreover, the robust gains achieved last week could encourage investors to lock in profits and proceed cautiously.

• From a technical standpoint, the FBM KLCI is anticipated to retest its immediate support-turned-resistance level at 1,434 this week, and fluctuate within the 1,427-1,445 range. Investors will likely keep a close eye on developments in the Middle East and upcoming U.S. corporate earnings reports.

• A decisive break above the psychological threshold of 1,450 could pave the way for the index to challenge its recent high of 1,463. Conversely, a drop below its 13-week SMA at 1,434 could lead the index to retest its next support level at 1,427, aligned with the 61.8% Fibonacci retracement.

Source: Kenanga Research - 16 Oct 2023