FBM KLCI (DOWNWARD BIAS)

• The FBM KLCI ended the week on a softer note, bucking the global market upward trend, as the on-going uninspiring corporate earnings failed to excite investors. The index has trended lower over the past three days and closed 2 points higher to 1,453.92 (-0.49% WoW) after testing its crucial 13-day Simple Moving Average (SMA) at 1,451 level.

• Looking ahead, while investors closely scrutinized the market for any indications that could support the case for the US Fed to pause its rate hikes, the attention in the local market will remain on 3Q corporate earnings with major banks such as Public Bank, CIMB Group and RHB Bank set to announce their results this week.

• From a technical perspective, the index has formed a 'Bearish Harami' chart pattern on its weekly chart, indicating potential challenges ahead. The overbought condition observed in the weekly Stochastic Oscillator also suggests a cautious outlook.

• Our expectation is that the index will test the 1,447 support level, which coincides with its 5-week SMA, in the upcoming week. A more critical support level lies at 1,440, aligning with its 13 and 50-week SMA. Conversely, a decisive breakthrough above the 1,465 key resistance level could open the path to the psychological resistance point at 1,500.

Source: Kenanga Research - 27 Nov 2023