Tuesday, April 02, 2019

Market Outlook as at April 2, 2019

FBMKLCI dropped almost 15 points to close at 1628.7 yesterday. The huge drop was mainly contributed by 5 stocks, namely PBBank lost 68 sen, IHH lost 20 sen, Maybank lost 7 sen, HLBank lost 32 sen and CIMB lost 7 sen. The scoreboard showed 445 gainers to 411 losers.

Looking at the daily chart, we can see FBMKLCI nearly tested the December 2018 low of 1627. We made a low of 1628. The index may rebound from here. If it failed to do, it may test the lower boundary of a potential wedge formation, ABCD at 1608-1610.

Chart 1: FBMKLCI's daily chart as at Apr 2, 2019_9.18am (Source: Malaysiastock.biz)

On the weekly chart, we can see that FBMKLCI broke below the line connecting the low since 2010 (AB). That breakdown, which occurred 2 weeks ago, led to the current round of decline.

Chart 2: FBMKLCI's weekly chart as at Apr 2, 2019_9.18am (Source: Malaysiastock.biz)

The sell-down of blue-chip stocks is especially bad among the banking stocks. However, we can see the Finance index is still above its long-term uptrend line.

Chart 3: Finance's monthly chart as at Apr 1, 2019 (Source: Kenanga's BTX chart)

Meanwhile we can see that other Asian markets (such as SSEC, HSI and STI) are starting to move up. It is disappointing that our FBMKLCI continues to go lower, instead of joining in the party. We have only ourselves to blame as we are too engrossed with non-stop politicking.

Chart 4: SSEC's daily chart as at Apr 1, 2019 (Source: Stockcharts.com)

 Chart 5: HSI's daily chart as at Apr 1, 2019 (Source: Stockcharts.com)

Chart 6; STI's daily chart as at Apr 1, 2019 (Source: Stockcharts.com)

Based on the bullish outlook for other Asian markets, it is likely that our current decline may find support, if not at the current level, then at 1610 or 1600. Despite attractive prices for some stocks, it is still prudent to be cautious and to watch for a recovery before buying.

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