The barometer for Bursa Malaysia, the FBM KLCI, has fallen in the past six weeks to its lowest in nearly three months.The performance of the local market was in line with global markets performances. Markets fell over fear of economies going into recession. Falling commodities prices also put pressure into the local market.
The FBM KLCI declined one per cent in a week to 1,599.22 points last Friday.
Trading volume remained weak as market participants were cautious. The average daily trading volume has declined to 2.2 billion shares last week from 2.6 billion shares the week before. The average daily trading value fell to RM1.8 billion from RM2.1 billion.
Foreign Institutions continued to sell on ringgit’s weakness in the past few weeks although the ringgit has held firm against the US dollar in the past one week. Net sell from foreign institutions in the past one week was RM598.1 million. Net buys from local institution and retail were RM426.2 million and RM171.9 million.
In the FBM KLCI, decliners out-paced gainers 3 to 2. The top three gainers were Dialog Group Bhd (3.5 per cent in a week to RM3.53), Westports Holdings Bhd (2.3 per cent to RM4) and Kuala Lumpur Kepong Bhd (1.8 per cent to RM24.02). The top three decliners were AMMB Holdings Bhd (minus 4.6 per cent to RM3.91), Genting Malaysia Bhd (minus 4.4 per cent to RM3.08) and Public Bank Bhd (minus 3.4 per cent to RM20.80).
Global markets performances were bearish except for China. The US dollar has strengthened against major currencies. The US Dollar Index increased to 98.2 points from 97.5 points two weeks ago. Hence, the Malaysian Ringgit held firm against the US dollar as compared to the previous week at RM4.18 per US dollar last Friday.
In the commodities market, crude oil (Brent) fell 2.4 per cent in a week to US$62.65 per barrel last Friday. Gold jumped to a fresh six- year high on fear in the equities market. Gold rose one per cent to US$1,523.60 an ounce, the highest since May 2013. Locally, crude palm oil (BMD) declined 0.3 per cent in a week to close at RM2,192 per metric tonne.
In the past one month, the FBM KLCI has been breaking support levels. The first immediate support level at 1,630 points was broken two weeks ago. Last week, the is testing the current immediate support level at 1,600 points. The index fell slightly below this level. The next support level is at 1,570 points and the immediate resistance is at the broken support now turned resistance at 1,630 points.
Trend-wise the FBM KLCI trend is bearish below both the short and long term 30- and 200-day moving averages. Furthermore, the FBM KLCI is below the Ichimoku Cloud and this shows that the market is getting strongly bearish. This shows that the market sentiment is bearish.
Momentum indicators like the RSI and Momentum Oscillator are starting to find some support at oversold levels. However, the MACD continues to stay below its moving average.
The FBM KLCI has been in a bearish trend since August last year when it fell and stayed below the long term 200-day moving average. Other markets globally have been above the 200-day moving average and have only started to fall below this average in the past 2 weeks. This is one of the reasons why most analysts predicting a recession as equity market performance normally leads economic performance.
The FBM KLCI is expected to remain bearish as long as it stays below the immediate resistance level at 1,630 points, which is the resistance level based on the Ichimoku Cloud indicator. The short term 30-day moving average is currently at 1,644 points. The next support level for the index to test in the short term is at 1,570 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.
