The market was bullish last week and the FBM KLCI broke the crucial resistance level at 1,876 points. Weaker ringgit and higher crude oil prices helped boost market sentiment. The weaker ringgit has helped boost the commodities and other export-oriented sectors. Foreign institutions buying helped lift the index. The FBM KLCI increased one per cent in a week to 1,887.75 points last Friday. On Thursday, the index closed at a historical high at 1,895.18 points.
Trading activity has eased last week. The average daily trading volume declined to 2.6 billion shares from 3.5 billion two weeks ago. The average daily trading value fell to RM2.4 billion from RM2.6 billion. This indicates more institutional participation in the market as the institutions normally trade higher-capped stocks.
In the FBM KLCI, gainers out-paced decliners 21 to six last week. The top gainers for the week were Petronas Dagangan Bhd (8.3 per cent to RM27.60), Press Metal Bhd (7.6 per cent to RM5.11) and Petronas Gas Bhd (3.2 per cent to RM18.60). The top decliners were AMMB Holdings Bhd (three per cent to RM3.88), Astro Malaysia Holdings Bhd (two per cent to RM1.94) and Genting Bhd (1.1 per cent to RM8.86).
Foreign institutions were net buyers last week. Net buy from foreign institutions was RM582 million while net sells from local institutions and retail were RM505 million and RM77 million respectively.
Global markets closed mostly higher except for China markets including Hong Kong. The Shanghai Stock Exchange Composite Index fell to its lowest level in 11 months.
The US dollar has strengthened against major currencies. The US dollar Index, which measures the US dollar against a basket of major currencies, increased to 90.3 points last Friday from 89.8 points the week before. The Malaysian ringgit has weakened against the US dollar despite the weaker US dollar index. The ringgit was RM3.90 to a US dollar last Friday against RM3.88 the week before.
Crude oil prices continued to climb higher and was at its highest level since November 2014. Crude oil (Brent) rose 1.5 per cent in a week to US$73.71 a barrel. Gold (COMEX) fell 0.8 per cent in a week to US$1,337.60 an ounce. In the local market, crude palm oil futures found support in the downtrend and increased 0.7 per cent to RM2,416 per metric tonne.
The FBM KLCI rose above the crucial resistance level at 1,875 points and stayed above it. This indicates a good bullish trend. Therefore, the bullish trend may continue it the index can stay above this crucial resistance level now turned immediate support level.
Technically, the FBM KLCI remained bullish above the short term 30-day moving average. Furthermore, the index continued to rise above Ichimoku Cloud indicator and the Ichimoku is rising. This indicates good support in the bullish trend.
Momentum indicators which has turned bullish two weeks ago has gained traction. The RSI and Momentum Oscillator indicators continued to rise above their mid-levels and the MACD indicator rose steadily. Furthermore, the FBM KLCI is now trading at the top band of the expanding Bollinger Bands indicator. This indicates strong bullish momentum.
We may see some profit taking activities as the index rose to historical highs but the bullish trend is still intact. The breakout also indicates that the bullish trend is set to continue. The upward projection for the breakout is at 1,960 points.
There is a high chance of this target being met in the short term if the index can stay above the immediate support level currently at 1,875 points. Even if the index can’t stay above this level, the bullish trend is expected to continue as long as it stays above the bullish trend support level currently at 1,840 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.