The current market is weak as the bears are still in charge. Last Friday, the FBMSC rebounded by 61.86 pts to settle at 15,169.40 pts. It formed a white candle that pierced more than half of the prior black candle’s body. This usually signals that the positive momentum is revving up. Nevertheless, until we witness a solid bullish follow-through, we think that the index is merely taking a breather. This is a normal reaction, especially after the series of weak performances that breached firmly below the 50-day, 100-day and 200-day SMA lines in the last two weeks. Overall, our near-term negative outlook remains intact.
Currently, we see that that the FBSMC is situated at its lowest level since July. In the absence of a solid positive development, this indicates that the bears are still in dominance over the bulls. This is also supported by the fact that the 14-day RSI Indicator is below the 50-pt neutral level, which points towards a weak outlook.
We keep the immediate support at 15,113 pts, which was the low of 30 Jun’s low. The next support is seen at 14,983 pts, ie the high of 8 Jul. Meanwhile, our immediate resistance stays at 15,234 pts, or 3 Aug’s low. This is followed by the 15,484-pt critical mark, which was obtained from the high of 9 Jun’s “Doji” candle.
source: RHB Research – 05/09/2016