Daily FBM KLCI chart as at April 24, 2015 using Next VIEW Advisor Professional
Bursa Malaysia is catching up with the bullish markets performances as the Malaysian ringgit and crude oil prices, which weigh down the index, are starting to favour the local market.
Crude oil continued to increase after a rebound last week and the ringgit got stronger against the US dollar.
The FBM KLCI broke above the 1,856 points immediate resistance level and close at its highest level in seven months.
The index increased 0.9 per cent to 1,862.58 points on a relatively higher trading volume.
Average daily trading volume last week increased to 2.7 billion shares as compared to 2.5 billion shares two weeks ago.
However, the average daily trading volume fell to RM2.2 billion from 2.3 billion two weeks ago.
This indicates that more lower-priced or lower-capped counters are being traded.
Local retail was active last week but the market is supported by foreign institutions as the Malaysian ringgit continued to strengthen.
From Monday to Thursday last week, net buying from foreign institutions was RM80.5 million.
Local institutions and local retail net selling were RM3.6 million and RM76.9 million respectively.
Oil and gas related stocks lifted up the FBM KLCI and decliners outpaced gainers two to one.
Top gainers in the FBM KLCI were Petronas Chemicals Group Bhd (+7.8 per cent from last week), Petronas Dagangan Bhd (5.3 per cent) and Sapurakencana Petroleum Bhd (4.8 per cent).
Top three decliners in the index were British American Tobacco (M) Bhd (2.8 per cent), IOI Corporation Bhd (2.2 per cent) PPB Group Bhd (1.3 per cent).
Bullish momentum persevered last week in the global markets but was more cautious as markets climbed to multi-year highs.
China’s Shanghai Stock Exchange Composite Index continued to climb to seven-year highs last week, rising 2.5 per cent in a week to 4,394.13 points.
Hong Kong’s Hang Seng Index rose 1.5 per cent to 28,060.98 points, the highest level in slightly more than seven years.
Japan’s Nikkei 225 climbed above the 20,000 points mark, the first time since 15 years ago.
The index rose 1.9 per cent in a week to 20,020.04 points.
However, Singapore’s Straits Times Index slipped into a correction, declining 0.3 per cent to 3,513 points.
The US and European markets pulled back marginally for a correction as the US dollar weakens against major currencies.
On Thursday, the Dow Jones Industrial Average declined only 0.2 per cent in a week to 18,058.69 points.
London’s FTSE100 fell 0.3 per cent to 7,046.89 points.
Germany’s DAX Index declined 2.3 per cent to 11,723.58 points.
The US dollar index declined from 97.61 points a week ago to 97.45 points.
This caused the Malaysian ringgit to strengthen against the US dollar from RM3.62 per US dollar to RM3.57. Despite the weaker US dollar, COMEX gold fell marginally – falling 0.4 per cent to US$1,193 an ounce.
Crude oil continued to increase last week with the WTI crude increasing 1.7 per cent to US$57.48.
Crude palm oil in Bursa Malaysia was directionless in the past one week rebounded and closed marginally higher from last week at RM2,151 per metric tonne.
The market is now expected to trend higher after breaking the immediate resistance level.
The FBM KLCI remained above the short term 30-day moving average and the 30-day moving average has crossed above the long term 200-day moving average.
This indicates a strong bullish trend.
Furthermore, the index is also above the rising Ichimoku Cloud indicator.
Momentum indicators like the RSI and Momentum Oscillators have started to increase after staying flat for a week.
The MACD indicator climbed above its moving average and the FBM KLCI climbed to the top band of the Bollinger Bands indicator.
These indicators show that the bullish momentum is starting to strengthen.
After a two week correction, the FBM KLCI is set to trend higher and an all-time high is in sight.
The chances are higher if the index can stay above the broken immediate resistance level at 1,856 points as this indicates that the market sentiment is very bullish.
Nevertheless, the market is still bullish if it can stay above the support level at 1,830 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.