FBM KLCI (UPWARD BIAS)

• Last week, the FBM KLCI continued its upward trend, breaking above the 1,500 level to close at 1,506.28, marking a 1.34% WoW increase. This strong performance was primarily fuelled by ongoing foreign buying interest and the continued recordbreaking trends in U.S. markets. Additionally, the local market sentiment also improved, particularly as certain small-cap stocks that previously hit limit down began showing signs of recovery.

• The upcoming shortened trading week will likely be influenced by key developments in the U.S. The Federal Reserve's meeting on Tuesday and Wednesday is a central focus, with market participants not anticipating a change in monetary policy but eager for indications on when rate cuts may begin. Additionally, the week is packed with major tech companies like Apple, Microsoft, Meta, Alphabet, Amazon, AMD, and NVO reporting their 4Q earnings. Investors will be closely monitoring how these significant earnings and economic announcements impact the market. Besides, the market could also receive a positive boost from the appointment of Malaysia's new Agong on 31 January.

• Technically, the FBM KLCI ended on a positive note after recording a double ‘Doji’ candlestick pattern in its weekly chart two weeks ago, which suggested potential continuation of its upward trend. Interestingly, the index's closing position on Friday was notably just a point below the critical 200-week SMA resistance level of 1,507, and it was also near the downward trend line established since April 2018. This positioning strongly suggests that the index may test these critical resistance levels and potentially form new patterns in the upcoming week.

• Key resistance levels for the index are at 1,507 and 1,527, with crucial support at 1,500 followed by 1,477.

Source: Kenanga Research - 29 Jan 2024