A technical rebound expected but trend remains bearish

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Daily FBM KLCI chart as at April 5, 2019.

Global markets indices and commodities performances as at April 5.

The market bucked the global markets performances and remained slightly bearish last week. Sentiment was weak on bearish export figures for February and weaker ringgit. The FBM KLCI fell 0.1 per cent in a week.

The average daily trading volume has increased to 2.9 billion shares last week from 2.9 billion shares the week before.

However, the average daily trading value slightly increased to RM2.0 billion from RM1.9 billion.

This indicates that more lower-capped stocks, which are generally favoured by local retail, were being traded.

In the FBM KLCI, decliners once again beat gainers 18 to 11. The top three gainers were Digi.com Bhd (3.3 per cent in a week to RM4.70), Hartalega Holdings Bhd (three per cent to RM4.77) and Maxis Bhd (2.4 per cent to RM5.49).

The top three decliners were IHH Healthcare Bhd (three per cent to RM5.60), AMMB Holdings Bhd (2.9 per cent to RM4.43) and Malaysia Airports Holdings Bhd (1.8 per cent to RM7.11).

Global market indices performances were bullish across the globe. China’s Shanghai Stock Exchange Composite Index led the Asian markets with a five per cent increased.

In Europe, Germany’s DAX led the market with an increase of 4.3 per cent. The US and UK markets were up.

The US dollar held firm against major currencies. The US dollar index, which measures the US dollar against a basket of major currencies, increased to 97.4 points last Friday from 97.2 points in the previous week.

The Malaysian ringgit weakened against the US dollar at RM4.09 per dollar last Friday as compared to RM4.08 in the previous Friday.

COMEX gold futures fell 0.1 per cent in a week to US$1,295.90 an ounce last Friday.

However, Crude oil (Brent) gained for the fourth week to its highest in six months, increasing 4.3 per cent to US$70.50 per barrel. In the local market, crude palm oil (BMD) jumped 5.6 per cent higher in a week to RM2,221 per metric tonne on higher unexpected demand.

The FBM KLCI remained below the immediate resistance level at 1,665 points after testing and rebounded from the immediate support level at 1,630 points last week.

Trend-wise, the FBM KLCI is bearish below both the short-term and long-term 30- and 200-day moving averages. The index is also below the Ichimoku Cloud indicator and the Cloud is getting bearish.

Momentum indicators continued to decline last week after increasing in the earlier part of the week.

This indicates that the bearish trend momentum is strong. The RSI and Momentum Oscillator declined and the MACD indicator remained below its moving average.

However, the RSI indicator is near its oversold level and hence may attract some buying.

The FBM KLCI may stage a rebound this week but with resistance at 1,665 points. If the index fails to climb above this level, then the bearish trend may resume and possibly break below the immediate support level at 1,630 points to the next support level at 1,600 points.

The short-term trend may turn bullish only if the index is able to climb above 1,665 points.

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.