Daily FBM KLCI chart as at October 24, 2014 using Next VIEW Advisor Professional
The benchmark FBM KLCI rebounded last week to close at a two-week high. The market bargain hunted for stocks after the index fell to its lowest level in a year two weeks ago. The FBM KLCI increased 1.7 per cent in a week to 1,818.86 points from last week after rebounding from a low of 1,766.22 points. However, the market is still technically in a down trend despite the rebound and trading volume was very low. The market sentiment was bullish on modest economic growth data in China but cautious over concerns on the momentum of the growth.
Average daily trading volume declined to only 1.7 billion shares in the past one week as compared to 2.2 billion previous week. Average daily trading value declined to RM1.9 billion from RM2.4 billion. Total market valuation increased RM39 billion from last week to RM1,735 billion last Friday. The market continued to be supported by local institutions as foreign institutions kept selling on weaker Malaysian ringgit encouraged foreign institutions to keep selling.
Net buying from local institutions last week (Monday to Thursday) was RM471.5 million. Foreign institutions net selling was RM295.1 while retail net selling was RM176.4 million. In the FBM KLCI, only four out of 30 counters declined.
Gainers were led by YTL Corporation Bhd (6.8 per cent), Felda Global Ventures Holdings Bhd (5.9 per cent) and Genting Malaysia Bhd (5.5 per cent) while decliners in the index were led by CIMB Group Holdings Bhd (1.7 per cent), Petronas Chemicals Group Bhd (1.6 per cent) and Hong Leong Financial Group Bhd (0.7 per cent).
Global markets rebounded as well as investors went into bargain hunting ahead of the year end window dressing. Markets were volatile in the past two weeks as gains in the past one week recovered most losses two weeks ago. Singapore’s Straits Times Index rose 1.7 per cent in a week at 3,222.55 points.
Hong Kong’s Hang Seng Index increased 1.2 per cent in a week 23,302.2 points. Japan’s Nikkei 225 rose 5.2 per cent in a week to 15,291.64 14,532.51 points. However, China’s Shanghai Stock Exchange Composite declined 1.7 per cent in a week to 2,302.28 points.
US and European markets rebounded on queues from Asia. The US Dow Jones Industrial Average rose 2.6 per cent in a week to 16,805.41 points on stronger US dollar that indicates that the US economy is still recovering well. The FTSE100 increased 1.2 per cent in a week to 6,388.73 points and Germany’s DAX rebounded 1.5 per cent in a week to 8,987.80 points. The US dollar Index increased from 85.21 points to 85.82 points.
Gold prices fell as stock markets and US dollar gained strength. COMEX gold declined 0.6 per cent in a week to US$1,231.20 an ounce. Crude oil continued its bearish and declined 1.9 per cent to US$81.30 per barrel. Crude palm oil rebounded on weaker Ringgit and bumper production. Crude palm oil futures in Bursa rose 1.9 per cent in a week to RM2,180 per metric ton. The Malaysian ringgit slightly weakened against the green back at RM3.28 to a US dollar as compared to RM3.27 a week ago.
The index rebounded prematurely as we have expected the support to come only at 1,750 points. However, the rebound is weak unless the index can stay above 1,800 points in the short term and break above the immediate resistance at 1,820 points. The trend remained bearish below the 30-day moving average. Market is worried as the rebound may be a “dead cat bounce” and is very cautious hence the low volume.
Momentum indicators like the RSI, Momentum Oscillator rebounded but remained below their mid-levels. The MACD indicator is still below its short term average or trigger line. Furthermore, the index is still trading slightly below the middle band of the Bollinger Bands. These indicators indicate that the market momentum is still bearish and further increase is needed to build up market confidence.
Last week, we have mentioned that if history does repeat itself, then we may see further downside. Support level is at 1,750 points and has the potential to even fall to 1,600 points if the governments, particularly the US, decided to tighten its money supply and raise interest rates. Technically, the FBM KLCI is expected to remain bearish if it is unable to stay above 1,800 points and break above 1,820 points.
Daily FBM KLCI chart as at 24 October 2014 using Next VIEW Advisor Professional. The above commentary is solely used for educational purposes and is the contributor’s point of view using technical al analysis. The commentary should not be construed as an investment advice or any form of recommendation. Should you need investment advice, please consult a licensed investment advisor.
The commentary should not be construed as an investment advice or any form of recommendation. Should you need
investment advice, please consult a licensed investment advisor.