Profit-Taking Pullback Due to Overbought Momentum

Blue chips climbed on Monday, led by construction, utility, plantation and oil & gas heavyweights, as trading momentum persisted on economic recovery and infrastructure plays. The FBM KLCI rose 8.09 points to close at 1,495.70, off an opening low of 1,488.60 and high of 1,498.52, as gainers led losers 628 to 470 on robust trade totalling 6.96bn shares worth RM4.21bn.

Resistance at 1,500/1,520; Supports at 1,480/1,450

Given the recent strong gains and overbought momentum, stocks should be due for profittaking pullback, which will be healthy to consolidate gains. On the index, further rise toward the 1,500 levels which capped upside in Jan 2023, and next hurdle at 1,520, may see it stalling for profit-taking consolidation. Immediate chart supports are revised upwards to 1,480, and 1,450, with better supports at 1,440 and 1,430.

Bargain Globetronics & Unisem

Globetronics will need breakout confirmation above the 76.4%FR (RM1.79) to aim higher and target RM1.92 and the 27/9/21 high (RM2.04) ahead, while the 100-day ma (RM1.54) cushions downside. Unisem need convincing breakout above the 61.8%FR (RM3.40) to aim for the 76.4%FR (RM3.74) and 22/11/21 high (RM4.28) going forward, with the 200-day ma (RM3.12) cushioning downside risk.

Asian Markets Slip Ahead of Key Economic Data

Asian markets slipped on Monday as investors braced for key economic data from the region and U.S. this week. Traders are keeping a close eye on inflation data from China this week that may give a better guide on the outlook for central-bank policy. Australia and Japan will release inflation figures on Tuesday and Thursday, while Bank of Korea will hold the first central bank meeting of the year among major Asia economies on Thursday. Traders are also looking to the US inflation print due Thursday for the next major guide for the Fed outlook as markets are still pricing in rate cuts by March.

Geopolitical tensions were also on the radar as disruptions in the Red Sea raised oil prices and shipping costs in Europe, while the Israeli conflict with Hamas threatened to spread to Lebanon. In China, the Shanghai composite index dropped 1.42% to 2,887.54, while South Korea’s Kospi lost 0.40%, ending at 2,567.82. In Australia, the S&P/ASX 200 fell 0.50% to close at 7,451.50, and Japan’s markets are closed for a public holiday.

Big Tech Stocks Boost Market

Wall Street major Indexes rose overnight as a fall in yields helped lift mega-cap stocks, while investors looked ahead to a key inflation reading for fresh clues. The Dow Jones Industrial Average rose 0.58% to 37,683.01. The S&P gained 1.41% to 4,763.54, while the Nasdaq Composite jumped 2.20% to 14,843.77. Mega-caps such as Amazon.com and Alphabet gained overnight as Treasury yields fell ahead of readings on inflation and a new supply of government debt this week, with the benchmark 10-year U.S. Treasury yield hitting a low of 3.966% on the session. This week, traders may gain greater clarity into the path of rate cuts from the Federal Reserve. The December consumer price index is set for release Thursday, followed by the producer price index on Friday. Those numbers should show whether the central bank’s efforts to bring inflation down to its 2% target are taking hold.

Apple also advanced after the iPhone maker said its Vision Pro mixed-reality device will be available for sale from Feb. 2 in the United States. Shares of Boeing fell about 6.5% and limited gains in the Dow Jones industrial average following the temporary grounding of dozens of Boeing 737 Max 9 aircraft for inspections, after a section of an Alaska Airlines fuselage blew out. The S&P 500 energy index was the sole decliner among the 11 S&P 500 sectors after hitting its lowest level in a month as crude prices sank about 4% after sharp price cuts by top exporter Saudi Arabia and a rise in OPEC output.

Source: TA Research - 9 Jan 2024