Overview of the Market Landscape

The Malaysian stock market experienced a challenging period, with the KLCI Index closing at 1,600.81 points, a decline of 14.02 points or 0.87%. Broad-based weakness was observed, with the healthcare sector being the worst performer. Market breadth was negative, with 900 losers versus 231 winners out of a total of 3.49 billion shares traded worth MYR2.93 billion. The report advises caution in the plantation sector, as declining crude palm oil (CPO) prices might keep the weakness ongoing. Similarly, the energy sector could experience profit-taking after its recent rally.

Eco World Development Group Berhad (ECOWLD) – 8206

Recommendation: Accumulate (Technical)

Eco World Development’s stock price has shown remarkable resilience since rebounding off the 200-day EMA in August 2024. The company has established a new uptrend, with its price action consistently testing its current highs. Increased trading volume suggests a possible breakout scenario that could lead to further upward movement. Analysts recommend accumulating the stock within the range of MYR2.03 to MYR2.15, with a stop-loss at MYR1.95. The estimated resistance levels stand at MYR2.32 and MYR2.50, with a time frame of 6 to 8 weeks.

Technical indicators further reinforce the bullish outlook. The stock’s performance aligns with rising momentum, signaling a potential continuation of its upward trajectory. Investors are encouraged to monitor the stock closely for a breakout confirmation.

Success Transformer Corporation Berhad (SUCCESS) – 7207

Recommendation: Accumulate (Technical)

Success Transformer Corporation has been trading within a sideways range after breaking out of its downtrend channel, which is a positive sign of a potential bullish reversal. The stock has consistently bounced off its 21-day EMA, reflecting strong support levels. The MACD indicator is sloping upward toward positive territory, signaling strengthening momentum.

The stock’s suggested buy range is between MYR0.705 and MYR0.745, with resistance levels at MYR0.800 and MYR0.880. A stop-loss should be set at MYR0.680, and the estimated time frame for this trade is 6 to 8 weeks. Investors are advised to watch for a close above the 50-day EMA, which could validate the emergence of a new upcycle.

Solar District Cooling Group Berhad (SDCG) – 0321

Recommendation: Accumulate (Technical)

Solar District Cooling Group has shown promising signs of growth since rebounding from its September 2024 lows. The stock price is now trading above all key moving averages and has tested its resistance level multiple times. Additionally, the RSI is rising, which suggests a strengthening bullish momentum. The stock’s performance is forming an ascending triangle pattern, and a confirmed breakout could lead to a continuation of its uptrend.

Analysts recommend buying the stock within the range of MYR0.525 to MYR0.560, with resistance levels at MYR0.600 and MYR0.660. The stop-loss level is set at MYR0.510, and the expected time frame is 6 to 8 weeks. Investors should look for a breakout above the resistance level to validate the bullish outlook.

Commodity and Derivatives Watch

Crude Palm Oil Futures (FCPO)

The FCPO has entered a bearish phase, breaking below the 200-day EMA. The 21-day EMA has crossed below the 50-day EMA, indicating weakening momentum. However, the RSI is in oversold territory, suggesting the possibility of a price base forming around the 61.8% Fibonacci Retracement level. Support levels are identified at MYR4,590 and MYR4,380, with resistance at MYR5,270 and MYR5,500. While the short-term trend remains down, the long-term trend is neutral.

FBM KLCI Futures (FKLI)

The FKLI has gapped down and is approaching the 200-day EMA. A break below this level could signal a bearish continuation. Although the MACD remains in positive territory, the RSI is not yet oversold, giving bears the upper hand. Support levels are at MYR1,580.00 and MYR1,506.00, while resistance is at MYR1,686.50 and MYR1,727.00. The short-term trend is down, with a neutral long-term outlook.

Conclusion

Maybank Investment Bank’s technical analysis highlights promising opportunities in the Malaysian stock market, particularly in Eco World Development, Success Transformer Corporation, and Solar District Cooling Group. Each stock exhibits unique bullish technical patterns that align with favorable trading strategies within their respective ranges and time frames. However, caution is advised in the broader market, especially in sectors such as plantations and energy, which face headwinds from commodity price fluctuations and profit-taking activities.

Investors are encouraged to leverage these insights, adhere to recommended stop-loss levels, and monitor breakout confirmations for potential returns. With a disciplined approach, these technical trading ideas could generate profitable opportunities in the current market landscape.