FBM Small Cap Index - Bulls Are Under Bearish Pressure

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