The market was volatile but directionless in the past week. The FBM KLCI was dragged down by component heavyweight Tenaga Nasional Bhd after its share price fell sharply on government’s decision to lower the electricity tariff.
However, the price rebounded and coupled with rising crude oil prices and slightly stronger ringgit, the index closed marginally lower from last week. The FBM KLCI declined only 1 point to 1,810.09 points after trading in a range between 1,780.21 and 1,812.08 points.
Market volume was lower in the past week ahead of the long holidays starting Thursday. Average daily trading volume declined from 2.2 billion shares two weeks ago to two billion shares in the past one week.
Market was supported by local institutions as foreign institutions started selling after a week of buying.
Net buying from local institutions last week (Monday to Friday) was RM748.9 million while net selling from foreign institutions was RM677.7 million.
In the FBM KLCI, gainers were on par with decliners. Top three gainers in the index were Felda Global Ventures Holdings Bhd (20.3 per cent from last week), CIMB Group Holdings Bhd (3.9 per cent) and Genting Malaysia Bhd (2.9 per cent).
Top three decliners in the index were Tenaga Nasional Bhd (4.9 per cent), MISC Bhd (1.9 per cent) and Telekom Malaysia Bhd (1.6 per cent).
Regional Indices
Markets were generally bullish last week. After declining for two weeks, Shanghai Stock Exchange Composite Index rose 3.4 per cent in a week to 3,247.43 points.
Hong Kong’s Hang Seng Index increased 1.0 per cent to 24,784.88 points. Japan’s Nikkei 225 increased 1.9 per cent to 17,991.66 points, the highest level in nine-and-a-half years.
However, Singapore’s Straits Times Index pulled back from its highest level in 20 months last week and declined 0.5 per cent to 3,415.91 points.
Last Friday, the US Dow Jones Industrial Average increased 1.6 per cent in a week to 18,019.35 points (US market was closed on Monday for a national holiday).
London’s FTSE100 index increased only 0.1 per cent to 6,855.31 points, near its 15-year high. but Germany’s DAX Index increased 2.4 per cent to 10,923.23 points after pulling back from a record close at 10,963.40 points last Friday.
US dollar was marginally lower, falling from 94.6 points a week ago to 94.4 points.
The ringgit was marginally stronger against the US dollar, from RM3.58 a week ago to RM3.57 to a US dollar.
Commodities
Bearish trend in gold continued amid marginally last week as strong equity markets performances garnered more attention. COMEX gold declined 0.6 per cent to US$1,230.00 an ounce.
Crude oil remained firm and the NYMEX WTI crude rose 0.7 per cent to US$52.78 per barrel. Crude palm oil futures in Bursa Malaysia pulled back after s strong rebound two weeks ago and declined 0.7 per cent in a week to RM2,284 per metric ton.
Observations
Technically, the FBM KLCI remained bullish but weak. The FBM KLCI remained above the short term 30-day moving average and the Ichimoku Cloud indicator.
However, the index still did not manage to overcome the long 200-day moving average and the immediate resistance level at 1,830 points.
This indicates that the market is being cautious and this is expected before the long weekend holiday starts.
The momentum of the bullish trend is weak as momentum indicators were unable to climb higher.
The MACD indicator has just crossed slightly below its moving average and the RSI indicator is forming a bearish divergence.
Furthermore, the Bollinger bands are starting to contract despite the index staying above its middle band.
Despite the coming holiday, the market still managed to remain firm and this indicates strong market confidence. If there are no negative catalyst in the global markets and economy, we may see the index trend higher after the holidays.
Nevertheless, the index has to break above the immediate resistance level at 1,830 points to boost market confidence and for the bullish trend to continue.
The trend is expected to remain bullish as though as the index stays above the immediate support level at 1,780 points.
I’d like to take the opportunity to wish “Gong Xi Fa Cai” to all those who are celebrating the Chinese New year and happy holidays to all. May the year of the goat bring more prosperity to the market.
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.