Tuesday, February 18

Bullish momentum to continue


Daily FBM KLCI chart as at December 20, 20

Last week, the FBMKMLCI climbed above the immediate resistance level at 1,585 points and rose above 1,600 points. Market sentiment was boosted by US trade deals with China which may soften the trade war between the two countries.

Rising commodities prices especially crude oil and crude palm oil has helped the local equity market.

The benchmark FBM KLCI increased 2.5 in a week to 1,610.18 points last Friday.

Trading volume, however, has declined on holiday season. The average daily trading volume in the past one week was at 2.5 billion shares as compared to 2.9 billion in the previous week. The average daily trading value fell sharply to RM2.2 billion from RM3.3 billion in the previous week.

Only two out of the 30 counters in the FBM KLCI declined in a week. The top three gainers were Top Glove Corporation Bhd (9.6 per cent in a week to RM4.81), PPB Group Bhd (8.6 per cent to RM19.96) and Petronas Gas Bhd (7.6 per cent to RM17.64).

The two decliners were Malaysia Petronas Dagangan Bhd (2.3 per cent to RM23) and Kuala Lumpur Kepong Bhd (0.4 per cent to RM24.60).

Global market indices performances closed mostly higher last week. However, in Asia, Singapore’s Straits Times Index and Japan’s Nikkei 225 closed lower.

The US Dow Jones index rose to historical highs and London’s FTSE100 rose to a four-month high. Germany’s DAX is trading near historical highs.

US dollar slightly strengthened against major currencies. The US dollar Index rebounded from a five-month low to 97.7 points last Friday from 97.1 points two weeks ago. The Malaysian ringgit remained firm at RM4.14 per US dollar last Friday as compared to the previous week.

Commodities price closed higher last week. COMEX Gold futures increased 0.1 per cent in a week to US$1,482.05 an ounce last Friday and brent crude oil increased 1.3 per cent to US$66.04 per barrel. In the local market, crude palm oil (BMD) jumped 2.1 per cent in a week to RM2,914 per metric ton last Friday, the highest in 34 months.

The FBM KLCI has turned bullish in the short term and trying to find its ways to narrow the year-to-date decline. The index is now 4.8 per cent lower from end of last year’s close.

Immediate resistance is at 1,620 points based on the long term 200-day moving average. Immediate support is at 1,580 points based on the short term 30-day moving average.

Technically, the FBM KLCI has turned bullish in the short term as it rose above the 30-day moving average and also the Ichimoku Cloud indicator.

The index is also near the long term 200-day moving average. Furthermore, the 30-day moving average is about to turn higher.

From indicating a positive divergence against the FBM KLCI in the past few weeks which meat a weak bearish momentum, momentum indicators like the RSI and Momentum Oscillators have started to climb above their mid-levels.

This indicates that the momentum as turned bullish. Furthermore, the MACD indicator has risen above its moving average.

Positive global markets performances have boosted local market sentiment. Rising commodities prices and effort to end the US-China trade war has also elevated investors confidence.

The market is hoping for a year end window dressing.

Last week, I mentioned that market was expected to rebound and test the resistance 1,610 points and it did. With no indication of resistance, the index may climb higher and the next resistance to test is 1,610 points. If it can stay above 1,6000 points, the index may even climb to 1,650 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 December 20, 2019