FBM KLCI (Neutral with Downward Bias)

• Investors enjoyed a strong start to 2024, with the FBM KLCI rising by 58.3 points or 4% MoM, driven by robust performance in the US market, the 'January Effect,' and the 'New Agong Rising Tide' phenomenon. This positive momentum extended into February, with the index marking a higher close at 1,516.58, up by 0.68% WoW, on the first trading day of the month.

• The FBM KLCI is expected to be subdued this week due to the upcoming Lunar Chinese New Year holidays and a lack of US economic data and corporate earnings releases, offering little stimulus for the market to move higher. Market liquidity might be constrained by the upcoming long holiday, potentially leading to a pause before it continues its upward trajectory.

• Technically, the FBM KLCI has shown strong performance after decisively breaking through the 1,500 level. The index has not only emerged from its triangle pattern but also surpassed its long-term downtrend line established since 2018, indicating a bullish long-term outlook. However, it may experience a pause this week and resume its upward trend after the CNY holidays. Market volatility is expected to increase in the last two weeks of February as numerous companies are slated to release their latest quarterly earnings, impacting investor decisions.

• The key resistance levels for the index are positioned at 1,527 and 1,563, with vital support found at 1,508 (coinciding with its 200-week SMA) and 1,500.

Source: Kenanga Research - 5 Feb 2024