Rising crude oil prices, slightly stronger ringgit and bullish global market performances lifted up Bursa Malaysia despite sluggish performance two weeks ago. After the long break in the weekend, the FBM KLCI gapped up and closed higher.
The market was on frenzy when it opened last Wednesday on bullish global market performances but the market immediately pulled back as traders took advantage of the increase for profit taking.
The FBM KLCI finally increased 1.8 per cent in a week to 1,813.25 points after trading in range between 1,796.41 and 1,831.41 points.
Average daily trading volume was firm at two billion shares last week as compared to the previous week. Average daily trading value declined from RM2.6 billion to RM2.3 billion. Foreign institutions returned into buying last week.
Net buying from foreign institutions in the past one week (Wednesday and Thursday) was RM320.8 million and net selling from local institutions and retail were RM249.7 million and RM71.1 million respectively.
In the FBM KLCI, gainers out-paced decliners 23 to seven. Top three gainers in the index were Astro Malaysia Holdings Bhd (7.5 per cent from a weak earlier), Petronas Chemicals Group Bhd (seven per cent) and CIMB Group Bhd (5.5 per cent).
The top three decliners in the index were Felda Global Ventures Holdings Bhd (4.5 per cent), RHB Capital Bhd (two per cent) and Maxis Bhd (1.6 per cent).
Regional Indices
Markets pulled back on cautious mode after increases in the past two weeks. Shanghai Stock Exchange Composite Index declined 4.2 per cent in a week to 3,211.67 points. Hong Kong’s Hang Seng Index increased 1.4 per cent to 24,507.05 points.
However, Japan’s Nikkei 225 continue to rise amid mildly, increasing 0.9 per cent in a week to 17,674.39 points. Singapore’s Straits Times Index pulled back from its 19-month high last week to close 0.6 per cent lower in a week to 3,391.2 points.
Markets were generally bullish in the past one week as market confidence began to build around the European Central Bank’s quantitative easing measures. On Thursday, the US Dow Jones Industrial Average increased 2.7 per cent in a week to 17,884.88 points. London’s FTSE100 index increased only 0.7 per cent in a week to 6,860.90 points, near the historical close at 6,878.49 points.
Germany’s DAX Index rose 1.5 per cent in a week to 10,905.41 near its record close. US dollar index began to pull back from its 11 year high, falling from 95 points in the previous week to 93.7 points. The ringgit strengthened against the US dollar from RM3.63 to RM3.53 to a US dollar.
Commodities
The bullish rally of gold halted last week as attention shifted towards equity markets. COMEX gold increased only 0.6 per cent in a week to US$1,265.20 an ounce. Crude oil rebounded from its five year lows. WTI crude rose 14.1 per cent in a week to US$50.92 per barrel.
The increase in crude oil prices also helped boost crude palm oil prices. Crude palm oil futures in Bursa Malaysia rose 9.3 per cent in a week to RM2,347 per metric ton last Friday.
Observations
The FBM KLCI remains steadily bullish above the short term 30-day moving average and the Ichimoku Cloud indicator. Furthermore, the index is slightly above the down trend resistance level at 1,810 points.
However, the index is still bearish in the long term as it remained below the 200-day moving average which is currently at 1,832 points after testing it last Wednesday.
Sentiment remained bullish as the momentum indicators like RSI, MACD and Momentum Oscillators continue to increase. The index once again traded near the top band of the Bollinger Bands after pulling back from it two weeks ago.
This indicates that the bullish momentum is strong in the short term. However, these indicators are now near the oversold levels and this would provide opportunity for profit taking.
The FBM KLCI is currently at a resistance level and the market confidence could be boosted if the index stays above 1,810 points and test the 1,830 points resistance level. We expect the index to test this level and breakout above 1,830 points could push the index to historical highs.
In the mean time, oil and gas stocks continue to provide opportunities as crude oil has just started to rebound and if the price (WTI crude) can stay above US$50 per barrel, oil and gas related stocks can continue to climb higher.
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.