Current weakness offers buying opportunities, says Maybank Research

KUALA LUMPUR: Maybank Investment Bank Research sees the current weakness, where the FBM KLCI fell nearly 14 points on Thursday, as an opportunity to accumulate.

While the rally from April 17, 2017 lifted KLCI to a new year high of 1,784.79 on May 3, 2017, it said on Friday this upward trend was now taking a breather. 

“Yesterday’s gap down violated its immediate support of 1,760, implying that selling pressure will likely intensify further.

“Notwithstanding that, we opine that current weakness offers an opportunity to accumulate as the longer-term trend remains healthy,” it said.

To recap, Maybank Research said the broader market was weaker on Thursday while the KLCI lost 13.84 points to close at 1,758.67 as profit taking intensified. 

The broader market reacted negatively with losers outpacing gainers by 824 to 185. A total of 3.44 billion shares worth RM2.88bil changed hands. 

“The correction is set to continue in tandem with the sharp pullback in oil price and subdued performances in overnight US markets. The benchmark index is expected to trade between 1,747 and 1,765. Downside supports are 1,744 and 1,730,” it said.

“Although the benchmark index is still holding above the 20-day EMA line, Stochastic has produced a sell signal (a bearish crossover) yesterday, indicating that the bear is gaining strength. 

“Support is seen at between the 61.8% Fibonacci retracement level and the 72% AWJ line of 1,744 to 1,750,” it said. If these levels fail to hold, the KLCI could even revisit its previous low at 1,729.