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HLBank Research Highlights

Author: HLInvest   |   Latest post: Fri, 7 May 2021, 9:23 AM

 

Traders Brief - Further Upside If Downtrend Resistance Near 1616 Is Taken Out Successfully

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MARKET REVIEW

Global. Asian markets ended mixed, as recent upbeat economic data in China raised worries over policy tightening. Sentiment was also dampened by the WHO’s warning that the trajectory of the pandemic is “growing exponentially.” Driven by a strong rebound in March retail sales, lowest weekly jobless claims since March 2020 and the upbeat mode on the 1Q21 results season, the S&P 500 (+45 pts to 4170) and Dow Jones (+305 pts to 34036) indexes hit record highs whilst while the Nasdaq surged 181 pts to 14038.

Malaysia. KLCI ended 10 pts higher at 1608.3, thanks to the bargain hunting interest that shifted towards index-linked glove makers given another spike in Covid-19 cases globally. Despite the headline gains, sentiment was bearish as 801 losers beat 323 gainers. After recording a total of RM356m net selling in the last 5 days, foreign investors turned net buyers (+RM78m, 16.9% of trading value; 5D: -RM234m) while the local institutions (- RM61m; 44.8% of trading value; 5D: +RM106m) and retail investors (-RM17m; 38.3% of trading value; 5D: +RM128m) emerged as the major net sellers.

TECHNICAL OUTLOOK: KLCI

Despite staging a strong rebound above 1600 levels yesterday, we expect KLCI to extend its sideways consolidation unless the downtrend line hurdle near 1616 can be taken out decisively. Upon a successful breakout, KLCI will advance higher to 1635-1646-1656 zones. Meanwhile, key supports are pegged at 1600-1585-1574

MARKET OUTLOOK

On the back of the renewed buying appetite on index -linked glove stocks coupled with the overnight bullish Wall St performance, KLCI may attempt to break above the immediate downtrend line resistance near 1616 today, followed by the 1635 (18 March high) levels whilst key supports are pegged at 1600-1585-1574 zones. Sector-wise, we believe major rubber glove makers such as Top Glove (HLIB BUY-TP RM7.00; Supports: RM4.90-5.00; Resistances: RM5.68-6.00), Hartalega (HLIB BUY-TP RM15.80 Supports: RM9.20-9.70; Resistances: RM10.40-11.00) and Kossan (HLIB BUY-TP RM5.22 Supports: RM3.20-3.50; Resistances: RM4.20-4.60) have staged successful downtrend resistance breakouts yesterday, ending their recent base building phases and poised for a further technical rebound in the short term, given the resurgent Covid-19 infections globally.

VIRTUAL PORTFOLIO POSITION-FIG1

In the wake of the market volatility, we decided to square off our virtual portfolio stocks i.e. FOCUSP (6.4% gain) and ASIAPLY (9.6% gain) on 15 April.

Source: Hong Leong Investment Bank Research - 16 Apr 2021

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