Daily FBM KLCI chart as at July 29, 2016 using
Next VIEW Advisor Professional
Market sentiment was bearish after a rebound last Monday. The FBM KLCI continued to slide on falling global markets and oil prices.
Market was also bearish over market returns after the world’s biggest pension fund, the Government Pension Investment Fund, lost 3.8 percent or US$51 billion, the biggest drop since 2009.
The FBM KLCI declined only 0.2 per cent in a week to 1,653.26 points, its lowest in three weeks after trading between 1,652.84 and 1,668.26 points.
Trading volume remained firm as compared to the previous week.
The average daily trading volume last week was 1.9 billion shares. However, the average daily trading value was also firm at RM1.8 billion.
Foreign institutions remained as net buyers in Bursa Malaysia on slightly stronger ringgit.
Net buy from foreign institutions was RM106 million while net sells from local institution and retail were RM92 million and RM14 million respectively.
The ringgit strengthened against the US dollar from RM4.07 per dollar to RM4.04.
Gainers were on par with decliners in the FBM KLCI. The top gainers for the week were CIMB Group Holdings Bhd (4.5 per cent in a week to RM4.39), Westports Holdings Bhd (3.9 per cent to RM4.50) and Sapurakencana Petroleum Bhd (1.4 per cent to RM1.43).
The top decliners were British American Tobacco (M) Bhd (9.4 per cent to RM49.36), Genting Bhd (7.5 per cent to RM8.22) and Sime Darby Bhd (three per cent to RM7.42).
Markets performances in Asia were generally bearish. China’s Shanghai Stock Exchange Composite declined 1.1 per cent in a week to 2,979.38 points last Friday.
Hong Kong’s Hang Seng Index shed 0.3 per cent in a week to 21,891.37 points.
Singapore’s Straits Times fell 2.6 per cent to 2,868.69 points. Japan’s Nikkei 225 index declined 0.3 per cent in a week to 16,569.27 points.
The US market declined for a correction after weeks of advances as the dollar weakens while European markets were mixed.
The US Dow Jones Industrial Average declined 0.7 per cent in a week to 18,432.24 points on Friday. London’s FTSE100 shed 0.1 per cent in a week to 6,724.43 points but and Germany’s DAX Index rose 1.9 per cent to 10,337.50 points.
US dollar weakened against major currencies. The US dollar index futures fell from 97.5 points to 95.5 points last Friday. COMEX Gold increased 2.1 per cent in week to US$1,349.70 ounce.
Crude oil (Brent) fell 4.7 per cent in a week to US$43.53 per barrel.
Crude palm oil in Bursa Malaysia was unchanged from last week at RM2,317 per metric tonne on stronger demand.
The FBM KLCI remained in a short term bullish trend correction with support at 1,650 points.
The short term moving average is also at this level. The FBM KLCI is in the Ichimoku Cloud and this indicates a directionless market.
However, the index is below the long term 200-day moving average that indicates a bearish trend in the long term. Resistance level is at 1,675 points and therefore the FBM KLCI is directionless if it stays between these support and resistance levels.
Momentum indicators are showing that the market sentiment is turning bearish. The RSI and Momentum oscillator declined below their mid-levels and the MACD indicator fell below its moving average.
Furthermore, the FBM KLCI fell below the mid-band of the Bollinger Bands indicator and the bands are tightening, indicating a directionless trend.
The FBM KLCI is near the immediate support level at 1,650 points and a breakout below this level could turn the trend bearish.
Momentum indicators are indicating bearish sentiment and therefore we expect further declines for the FBM KLCI.
Furthermore, there is no bullish catalyst to support the market at this moment. The FBM KLCI may decline to the next support level at 1,610 points in the short term.
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.