The market rebounded as expected after the FBM KLCI found support at 1,683 points in the sell down two weeks ago. The local market performance was in line with global markets which have also rebounded from a bearish market.
The FBM KLCI increased only 0.1 per cent in a week to close 1,732.14 points last Friday in mostly directionless week.
Market sentiment was weak and hence the decline in market activity.
The average daily trading volume has increased to two billion from 2.5 billion shares in the previous week and the average daily trading value rose to RM2.1 billion from RM2.5 billion.
Foreign institutions were net sellers as ringgit weakens. Net sell from foreign institutions was RM129 million while net buys from local institutions and local retail were RM120 million and RM9 million respectively.
In the FBM KLCI, gainers beat decliners two to one. The top three gainers were Genting Bhd (3.5 per cent in a week to RM7.44), Genting Malaysia Bhd (3.2 per cent to RM4.49) and MISC Bhd (2.9 per cent to RM5.73).
The top three decliners were Telekom Malaysia Bhd (7.3 per cent to RM2.41), Axiata Group Bhd (5.1 per cent to RM3.71) and IHH Healthcare Bhd (4.3 per cent to RM4.96).
Global markets performances were weak. Markets in Asia fell while US and European markets rebounded. Shanghai Stock Exchange Composite Index fell to its lowest in nearly 4 years last week and Hong Kong’s Hang Seng Index fell to a year’s low.
Markets in US and Europe including UK rebounded and closed marginally higher from the previous week.
US dollar has slightly strengthened against major currencies. The US dollar Index (which measures the US dollar against major currencies) increased to 95.6 points last Friday from 95.2 points the week before.
The Malaysian ringgit has weakened slightly against the US dollar at RM4.16 to a US dollar as compared to RM4.15 in the previous week.
Commodities prices were directionless. Price of gold in COMEX rose 0.7 per cent in a week to US$1,230.00 an ounce. Brent crude oil fell 0.5 per cent to US$80.02 a barrel. Locally, crude palm oil futures fell 1.3 per cent to RM2,222 per metric tonne.
The index rebounded from the immediate support level at 1,683 points two weeks ago in the down trend but failed to overcome the immediate resistance level at 1,755 points based on the 50 per cent Fibonacci retracement level of the immediate down trend.
This shows that the market is still not out of the bearish trend.
Technically, the FBM KLCI trend is bearish below both the short and long term 30- and 200-day moving averages.
Furthermore, the index remained below the Ichimoku Cloud indicator after failing to climb above the lower band of the Ichimoku Cloud indicator.
Momentum indicators rebounded but failed to turn bullish. Momentum indicators like the RSI and Momentum oscillator failed to climb above their mid-levels and are starting to decline.
The MACD indicator remained below its moving average or trigger line. This indicates that the bearish trend momentum is strengthening.
The FBM KLCI trend turned bearish two weeks ago after breaking below the support level at 1,780.0 points.
Today, the trend is still bearish and is expected to remain bearish if the index continues to stay below the immediate resistance level at 1,755 points.
If it fails to break above this resistance level, the index may test the support level at 1,683 points and may even fall below this level.
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.
Source: Borneo Post Online