Daily FBM KLCI chart as at June 16, 2019
The market failed to rally last week and declined as sentiment was weakened by falling crude oil and palm oil prices. Furthermore, after a week of stronger ringgit, the ringgit started to weaken against the US dollar last week. The benchmark FBM KLCI was not in tandem with a generally bullish global markets indices performance.
Trading volume is starting to pick up last week after a week-long holiday celebration two weeks ago. The average daily trading volume has increased to 2.4 billion shares last week from 1.4 billion shares the week before. The average daily trading value increased to RM1.9 billion from RM1.4 billion. The is also indicates more lower-capped stocks were being traded.
Weaker ringgit and lower commodities prices led to foreign selling. Net sell from foreign institutions were RM415.3 million. Net buys from local institutions and retail were RM 320.2 million and RM95.1 million respectively
In the FBM KLCI, decliners beat gainers 17 to nine. The top three gainers were Malaysia Airports Holdings Bhd (7.2 per cent in a week to RM8.17), Genting Malaysia Bhd (2.5 per cent to RM3.23) and IHH Healthcare Bhd (2.2 per cent to RM5.63). The top three decliners were Tenaga Nasional Bhd (4.7 per cent to RM12.18), Press Metal Aluminium Holdings Bhd (3.8 per cent to RM4.29) and Petronas Gas Bhd (3.7 per cent to RM17.60).
Global markets performances were bullish last week. Despite the mass protest in Hong Kong over a controversial extradition Bill that would allow people to be sent to mainland China for trial, Shanghai and Hong Kong markets closed higher. US and European markets closed marginally higher.
The US dollar Index increased to 97.5 points last Friday from 96.6 points as compared to the previous week. The Malaysian ringgit weakened against the US dollar at RM4.17 per US dollar from RM4.16 the week before.
Crude oil fell for the fourth week last week amid at a slower pace. Crude oil (Brent) fell 1.9 per cent in a week to US$62.04 a barrel last Friday.
The price is trading at January 2019 prices. Uncertain markets caused gold to surge at its highest in almost 14 months. COMEX gold futures was firm at US$1,345.30 an ounce. Crude palm oil (BMD) fell 0.9 per cent in a week to RM2,008 per metric ton.
The FBM KLCI failed to rally last week and did not manage to overcome the immediate resistance at 1,657 points. The immediate support level is at 1,610 points.
The FBM KLCI trend remained bullish in the short term above the short term 30-day moving average and the short-term downtrend line. However, the index is still bearish in the longer term as the index is still below the 200-day moving average.
Furthermore, the index remained in the Ichimoku Cloud indicator. This indicates market uncertainty.
Momentum indicators are starting to pull back last week after weeks of increasing. The RSI and Momentum Oscillator declined but still above their mid-levels. This indicates a weak bullish momentum. However, the MACD remained above its moving average.
The trend is bullish but the conflict in the momentum indicators show that the FBM KLCI is in a correction. The failure to rally last week despite bullish global markets performances also indicates weak market confidence. Therefore, we expect the market to continue to consolidate and the FBM KLCI to pull back to its support level at 1,610 points if it fails to overcome the resistance level at 1,657 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 investment advice or any form of recommendation. Should you need investment advice, please consult a licensed investment advisor.
Global markets indices and commodities performances as at June 16, 2019