Thursday, September 23

Eyes for a record high market performance


Daily FBM KLCI chart as at August 10, 2018

Global markets indices and commodities performances as at August 10:

The market continued to be bullish and the FBM KLCI rose for the fifth week. Furthermore, the benchmark index broke above the resistance level at 1,790 points.

The market was supported by foreign institutions and focus was on commodities-based stocks as prices of commodities rebound. The FBM KLCI increased 1.4 points to 1,805.75 points last Friday.

Market participation has marginally increased last week.

The average daily trading volume increased to 2.4 billion shares from 2.3 billion shares two weeks ago and the average daily trading value remain almost unchanged at RM2.3 billion from the previous week.

Foreign institutions were net buyers for the second week last week. Net buy from foreign institutions was RM458 million and net sells from local institutions and retail were RM354 million and RM104 million respectively.

In the FBM KLCI, gainers outpaced decliners five to one. The top three gainers were Hartalega Holdings Bhd (7.3 per cent in a week to RM6.60), Press Metal Aluminium Holdings Bhd (6.4 per cent to RM5) and Axiata Group Bhd (4.2 per cent to RM4.50).

The top three decliners were MISC Bhd (4.9 per cent to RM6.18), IHH Healthcare Bhd (2.5 per cent to RM5.75) and Petronas Gas Bhd (0.4 per cent to RM19.00).

Asian markets (except Japan) were closed higher last week but European and US markets fell. Hong Kong’s Hang Seng Index take the lead in Asia, rising 2.5 per cent in a week but Japan’s Nikkei225 fell one per cent.

In Europe, Germany’s DAX fell for the second week.

The US dollar Index, which measures the US dollar against a basket of major currencies, rose to its highest in on year. The US dollar index closed at 96.3 points last Friday as compared to 95.2 points the week before.

However, the Malaysian ringgit was firm against the US dollar at RM4.08 and this means that the ringgit has strengthened against other major currencies.

Prices of gold and oil were directionless and ended marginally lower. Gold (COMEX) declined 0.2 per cent in a week to US$1,229.20 an ounce last Friday while crude oil (Brent) fell 0.6 per cent to US$72.96 a barrel.

However, crude palm oil futures rebounded and increased 2.1 per cent to RM2,243 per metric tonne last Friday.

The FBM KLCI closed higher for the fifth week and rose above the resistance level at 1,790 points. This resistance level now turns immediate support level.

The index is now testing the 61.8 per cent Fibonacci retracement level of the bearish trend that started in April at 1,806 points.

Technically, the FBM KLCI remained bullish above the short term 30-day moving average and rose above the long term 200-day moving average last week.

The FBM KLCI is also above a wide cloud and this indicates good support for the bullish trend. Furthermore, the Cloud has changed to a bullish direction.

The bullish momentum strengthened last week. The RSI, MACD and Momentum Oscillator indicators are rising and this indicates a strong bullish momentum. However, these indicators also indicate that the index is overbought in the short term.

In conclusion, the bullish momentum is still strong and this would be extended despite the index being overbought.

The index has a high chance of climbing higher towards the next resistance level between 1,880 and 1,900 points if it can stay above 1,790 points. Nevertheless, the index is technically bullish if it stays above the bullish trend support level at 1,760 points.

We may expect minor pull backs along the way as the market may take profits while rising.

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.