FBM KLCI (BULLISH BIAS)

• The FBM KLCI finished the week on a high note, in line with the global market's rising trend, despite lacklustre 3QCY23 corporate earnings. The index momentarily dipped to its essential 50-week Simple Moving Average (SMA) support at 1,440, yet managed to rebound, ending the week with a 0.17% increase at 1,456.38. Remarkably, the index's peak for the week occurred on the final Friday, reflecting continued positive momentum, largely driven by the robust performance of the US market, despite the absence of direct local catalysts.

• Moving forward, the expected robust performance of the US market is anticipated to further support regional markets, including Malaysia's. As year-end window dressing nears, the index is likely to retest its recent high this week. However, it's important to note that this external bullish momentum could be disrupted by factors such as escalating tensions following attacks in the Red Sea, significant shifts in economic data, or changes in expectations regarding interest rate cuts.

• From a technical standpoint, the index's rebound from its 50-week SMA and closure at a weekly high suggests that the recent uptrend is intact, despite the overbought condition indicated by the weekly Stochastic Oscillator. On its daily chart, the index has resumed its upward trajectory after witnessing strong buying interest at its 50-day SMA (at 1,444), reinforcing the intact positive momentum.

• Our expectation is that the index will challenge the critical recent high resistance level of 1,465 this week. A strong and sustained break above this level could pave the way to the psychological resistance point at 1,500. Conversely, a decisive break below the key support level of 1,444 could lead to a decline towards 1,431, coinciding with its 200-day SMA level.

Source: Kenanga Research - 4 Dec 2023