It is indeed a pleasant surprise that our market did not react negatively to the news today. In fact, FBMKLCI was up 2-3 points this morning before it dipped to overnight level at around 3:00 pm. I have expected the market to be weaker today, and to remain weak for a while until we have greater clarity that the threat to the current government has passed.
Looking at the 4 charts below, we can see FBMKLCI, which represents our blue chip stocks, has broken below the line connecting the lows for the past 9 years. This index is expected to stay weak as more foreign funds would reduce their position in view of the political risk. On further weakness, FBMKLCI may drop to 1600-1610.
Chart 1: FBMKLCI's weekly chart as at April 5, 2019 (Source: Malaysiastock.biz)
FBM70, representing 2nd & 3rd liner stocks, has tested the line connecting the lows for the past 9 years and rebounded from it.
Chart 2: FBM70's daily chart as at April 5, 2019 (Source: Malaysiastock.biz)
FBMSCAP, which represents the small cap stocks, has dropped back to where it was 9 years ago.
Chart 3: FBMSCAP's daily chart as at April 5, 2019 (Source: Malaysiastock.biz)
Strangely, FBMFLG, which represents the lowest rung of stocks on our exchange, is still in an uptrend line.
Chart 4: FBMFLG's daily chart as at April 5, 2019 (Source: Malaysiastock.biz)
In this uncertain time, the best approach is to stay at the sideline. If you want to take a position for whatever reason, you are advisable to take only a minimum position. Good luck!