Daily FBM KLCI chart as at February 13, 2015 using Next VIEW Advisor Professional
We were expecting the market to continue its bullish momentum last week but the FBM KLCI was dragged down by component heavyweight Tenaga Nasional after the government decided to lower electricity tariff because of low crude oil prices.
However, the market rebounded last Friday and recovered some losses. At the moment, the market looked uncertain ahead of the Chinese New Year holiday season this week. The FBM KLCI declined 0.7 per cent in a week to 1,800.95 points after trading in range between 1,796.41 and 1,818.31 points.
Despite the coming holiday, trading volume has increased. The average daily trading volume increased to 2.2 billion shares in the past one week as compared to two billion shares in the previous week. Average daily trading value rose marginally from RM2.3 billion two weeks ago to RM2.4 billion last week.
Average daily trading volume was firm at two billion shares last week as compared to the previous week. Average daily trading value declined from RM2.6 billion to RM2.3 billion. Foreign institutions started selling again last week.
Net selling from foreign institutions in the past one week (Wednesday and Thursday) was RM549.2 million and net buying from local institutions was RM573 million.
In the FBM KLCI, gainers out-paced decliners 23 to seven. Top three gainers in the index were Felda Global Ventures Holdings Bhd (14.6 per cent from a weak earlier), Sapurakencana Petroleum Bhd (3.9 per cent) and Malayan Banking Group Bhd (2.9 per cent).
The top three decliners in the index were Petronas Dagangan Bhd (6.1 per cent), Tenaga Nasional Bhd (5.9 per cent) and Telekom Malaysia Bhd (2.4 per cent).
Regional indices
Markets were generally bullish but cautious on euro’s quantitative easing measures. Shanghai Stock Exchange Composite Index increased 4.2 per cent in a week to 3,204.61 points. Hong Kong’s Hang Seng Index increased 1.4 per cent to 24,682.54 points.
However, Japan’s Nikkei 225 rose 1.5 per cent in a week to 17,913.36 points after pulling back from its seven-and-a-half year high on Thursday. Singapore’s Straits Times Index declined only 0.2 per cent to 3,426.22 points.
On Thursday, the US Dow Jones Industrial Average increased only 0.5 per cent in a week to 17,972.38 points. Germany’s DAX Index rose only 0.1 per cent in a week to 10,919.65 but at a record close. However, London’s FTSE100 index declined 0.5 per cent in a week to 6,822.66 points.
The US dollar index gained some strength last week, rising from 93.7 points in the previous week to 94.2 points. The ringgit weakened against the US dollar from RM3.53 to RM3.59 to a US dollar.
Gold continued to decline as US dollar remained strong and equity markets were favourable. COMEX gold declined 3.5 per cent in a week to US$1,221.10 an ounce.
Crude oil rebounded from its five year lows. WTI crude increased marginally US$51.34 per barrel. The increase in crude oil prices also helped boost crude palm oil prices. Crude palm oil declined 2.3 per cent in a week to RM2,293 per metric ton last Friday on weak demand.
The FBM KLCI failed to re-test the long term 200-day moving average. This indicates that the market is still being cautious despite the bullish momentum in the short term.
The movement in the past one week indicates uncertainty but nevertheless, it is still bullish in the short term as the index is above the 30-day moving average and the index remained above the Ichimoku Cloud indicator.
The momentum of the bullish trend is weakening. The MACD indicator is starting to decline and almost crossed below its moving average.
Furthermore, the Bollinger bands are starting to contract and the index is just slightly above its middle-band. Lastly, there is a bearish divergence on the RSI indicator.
We are still seeing the FBM KLCI struggling to break the down trend line and 200-day moving average resistance level. If the index fails to break above this level in the next one or two weeks, we may see a pull back as market confidence weakens.
The chances of the FBM KLCI climbing higher is great if it can stay above 1,800 points and break above 1,830 points, which is the resistance level it is struggling to overcome.
This could catapult the index to historical highs this year. Immediate support level for the current bullish trend is at 1,780 points.
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.