Tuesday, January 21

Market may stage a technical rebound

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Daily FBM KLCI chart as at October 11, 2019

The FBM KLCI was firm last Friday as compared to the previous week and was against the global market trend. The market was cautious ahead of the tabling of the national budget on Friday. The decline indicates weak expectations. Furthermore, weakening of the US dollar pressured more foreign institutional selling. The FBM KLCI declined only 0.1 per cent in a week to 1,556.84 points last Friday.

Trading volume has increased last week but focused on lower-capped counters. The average daily trading volume in the past one week was at 2.4 billion shares as compared to 2.1 billion in the previous week. However, the average daily trading stayed firm at RM1.7 billion.

The market is supported by local participants. Net buys from local institutions and retail were RM268.2 million and RM64 million (Monday to Thursday). Net sell from foreign institutions was RM332.2 million.

In the FBM KLCI, decliners beat gainers 16 to nine. The top three gainers were MISC Bhd (6.2 per cent in a week to RM8.28), Tenaga Nasional Bhd (2.7 per cent to RM13.88) and Hong Leong Bank Bhd (1.3 per cent to RM16.22). The top three decliners were Top Glove Corporation Bhd (4.1 per cent to RM5.44), AMMB Holdings Bhd (3.8 per cent to RM4.57) and IOI Corporation Bhd (2.4 per cent to RM4.11).

Global markets performances were generally bullish last week except for the local market. The US dollar was slightly weaker against major currencies last week. The US dollar Index declined to 98.3 points last Friday from 98.8 points two weeks ago. The Malaysian ringgit slightly weakened against the US dollar at RM4.19 to a US dollar last Friday as compared to RM4.18 two weeks ago.

Gold price fell slightly while crude oil price rebounded. COMEX Gold futures declined 1.3 per cent in a week to US$1,493.50 an ounce last Friday.

Brent crude rose 3.9 per cent to US$60.66 per barrel. In the local market, crude palm oil (BMD) increased 1.6 per cent to RM2,182 per metric tonne last Friday.

The FBM KLCI remained below the broken support level 1,585 points and this shows a weak market. The next support level is at 1,500 points while the broken support level now turned immediate resistance level at 1,585 points.

Trend-wise, the FBM KLCI is remained bearish below both the short and long term 30- and 200-day moving averages and the averages continue to decline. Furthermore, the index is below the Ichimoku Cloud indicator and the Cloud is falling downwards but narrower.

Momentum indicators like the RSI and Momentum Oscillator is starting to rebound from their oversold levels. However, the MACD indicator is below its moving average and this indicates that the FBM KLCI is still bearish.

The market is still in a down trend as the indicators suggested but is currently oversold. The index has found a temporary support at 1,550 points, which was earlier suggested. Henceforth, a technical rebound is expected and the FBM KLCI to retest 1,585 points immediate resistance level, if it stays above 1,550 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 October 11, 2019