Daily FBM KLCI chart as at November 19, 2014 using Next VIEW Advisor Professional
The FBM KLCI declined as expected and near the level that we expected the index to be and that is 1,650 points.
However, the index fell to as low as 1,671.82 points last Wednesday before rebounding for the next three days.
The rebound however, was not able to recover the losses made earlier in the week. The rebound came after crude oil prices started to find some support at US$55 per barrel (WTI Crude) and the ringgit gained traction.
Furthermore, global markets rebounded strongly as well on Wednesday possibly due to year-end window dressing. The FBM KLCI fell one per cent in a week to 1,715.99 points.
Trading volume increased as the market started to hunt for bargains after the index fell to its lowest level in 20 months early last week.
The average daily trading volume in the past one week rose to two billion shares from 1.4 billion two weeks ago.
Average daily value increased to RM2.2 billion from RM1.7 billion two weeks ago.
Once again this indicates that higher priced stocks, which are normally traded by institutions, were most traded.
Foreign institutions continue to cash out of Bursa Malaysia aggressively. The net selling from foreign institutions last week (Monday to Thursday) was RM788.7 million while net buying from local institution was RM853.4 million. In the FBM KLCI, decliners outpaced gainers three to two.
Top three gainers for the week were Petronas Chemicals Group Bhd (2.2 per cent in a week), Maxis Bhd (2.1 per cent) and SapuraKencana Petroleum Bhd (1.8 per cent) while decliners in the index were led by Felda Global Ventures Holdings Bhd (14.2 per cent), RHB Capital Bhd (5.8 per cent), and Kuala Lumpur Kepong (5.3 per cent).
Markets in Asia rebounded mid of last week but some failed to cover losses made earlier in the week like the local bourse.
Hong Kong’s Hang Seng Index declined 0.6 per cent in a week to 23,116.63. Singapore’s Straits Times Index declined 1.3 per cent to 3,279.53 points.
However, China’s market continued its bullish rally as the Shanghai Stock Exchange Composite Index rose 5.85 in a week to 3,109.70 points, the highest level in 4 years. Japan’s Nikkei 225 increased 1.4 per cent in a week to 17,621.40 points.
Markets in US and Europe rebounded as well mid-week but stronger as most indices closed higher in a week.
On Thursday, the US Dow Jones Industrial Average declined 2.0 per cent in a week to 17,596.34 points.
London’s FTSE100 Index fell marginally lower from last week at 6,466.00 and Germany’s DAX declined only 0.5 per cent to 9,811.06 9,862.53 points.
The US dollar gained strength against major currencies. The US dollar index increased from 88.94 points to 89.48 points.
However, the Malaysian held stronger against the US dollar at RM3.47 per US dollar from RM3.50 a week before.
Stronger US dollar put a halt to the gold rally. COMEX gold declined 2.4 per cent in a week to US$1,198.20 an ounce. NYMEX WTI crude oil declined 6.8 per cent in a week to US$55.12 per barrel.
Falling crude oil prices continue to pressure crude palm oil. Crude palm oil futures in Bursa Malaysia declined 0.8 per cent to RM2,171 per metric ton.
The rebound in the middle of the week indicates support but failed to change the bearish trend.
The index continued to stay below the short term 30-day moving average currently at 1,778 points and below the Ichimoku Cloud indicator at 1,820 points. The Cloud remains quite narrow and this shows that the market can still be volatile and directionless.
Momentum indicators still indicate bearishness but the momentum of this bear trend is getting weaker.
The RSI continued rebounded from its oversold line and the MACD hooked up but still below its moving average.
Furthermore, The FBMKLCI is still trading below the middle band. The thin Ichimoku Cloud indicates a directionless market and can be volatile. The thin Cloud lasts another two weeks.
The FBMKLCI made a 17 points gap from last Monday’s open at 1,715.87 points and last two Friday’s close at 1,732.99.
The index is eager to fill in the gap by climbing to 1,732.99 points. If it’s able to close and stay above this level, then the bearish trend may turn bullish.
However, if the index fails to fill the gap and stay above 1,733 points, then we can expect the bearish trend to continue towards 1,650 points.
The above commentary is solely used for educational purposes and is the contributor’s point of view using technical 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.