Market to consolidate

Daily FBM KLCI chart as at September 14, 2018

Global markets indices and commodities performances as at September 14:

After a long holiday break last week, the market was volatile as it seeks catalysts. It started with a bearish note as global markets were bearish and ended up higher in a week after markets rebounded strongly. The FBM KLCI closed 0.3 per cent higher at 1,803.76 points in the short trading week but the trading range was between 1,777.45 and 1,822.68 points.

It may have been a short week last week but the average daily trading volume was slightly higher compared to the week before.

The average daily trading volume increased to 2.5 billion from 2.4 billion shares in the previous week.

The average daily trading value increased to RM2.6 billion from RM1.9 billion. This indicates more higher-capped counters were being traded.

Market participation in Bursa Malaysia was mixed. Net buy from local and foreign institutions were RM21 million and RM3 million respectively while net buy from local retail was RM24 million.

Despite the FBM KLCI closing higher in a week, the index component stocks that declined outweighs the gainers 17 to 12. The top three gainers were CIMB Group Holdings Bhd (5.2 per cent in a week to RM3.50), DIGI.com Bhd (3.7 per cent to RM4.78) and Dialog Group Bhd (2.9 per cent to RM2.90).

The top three decliners were Hartalega Holdings Bhd (4.4 per cent to RM6.68), IHH Healthcare Bhd (four per cent to RM5.29) and Sime Darby Bhd (3.7 per cent to RM2.59).

Most markets performances were generally bullish last week. In Asia, markets rebounded after Hong Kong’ Hang Seng Index fell to its lowest in a year two weeks ago and Singapore Straits Times index was at its 16-month low.

However, the Shanghai market remained bearish and was at its lowest level in 4 years.

The US market rose to its highest level in 7 months while markets in Europe including the UK rebounded after falling to multi-month lows two weeks ago.

US dollar has weakened against major currencies. The US dollar Index declined to 94.9 points last Friday from 95.3 points the week before. Hence, the Malaysian ringgit held against the US dollar from the previous week, at RM4.14 to RM4.13 per US dollar last Friday.

Prices of major commodities were ended up mixed. Gold (COMEX) fell for the third week, declining 0.3 per cent in a week to US$1,198.30 an ounce last Friday. Crude oil (Brent) continued to increase and the price rose 1.3 per cent to US$78.10 a barrel.

In the local scene, crude palm oil futures fell 1.9 per cent to close at RM2,222 per metric tonne on high inventory levels.

Trading range was almost 50 points last week but it remained above the bullish trend support level at 1,794.0 points. This shows that there is still support for the bullish trend. However, a new support level at 1,780 points was established from last week’s performance and also resistance at 1,820 points.

The FBM KLCI fell below its short and long term 30-day and 200 day moving averages but immediate climbed back above these levels. This indicates that the trend is still bullish. Furthermore, the index is above the Ichimoku Cloud indicates and the Cloud is at its crossover point to a becoming bullish.

Momentum indicator indicate a weak trend. In other words, there is no clear direction. Momentum indicators like the RSI and Momentum Oscillator are at their middle levels.

However, the MACD indicator remained below its moving average. The mixed indications from these indicators indicate a directionless market.

After a volatile week, the market is expected consolidate. Technical indicators show that the market is directionless. However, the market still has a bullish bias as the index remained above the short and long-term moving averages.

The FBM KLCI is expected to consolidate between 1,780 and 1,820 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.

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