Market started on a bearish note this year but may rebound this week

Daily FBM KLCI chart as at 4, 2019.

Global markets indices and commodities performances as at January 4.

Last year (2018), the FBM KLCI ended up in red and the local market wasn’t the only casualty. Markets globally ended lower. The index fell 5.8 per cent last year, which was one of the lowest declines as compared to other markets. The biggest drop in Asia was ’s Shanghai SEC Index that fell 24.6 per cent. In Europe, Germany’s DAX fell 18.3 per cent. UK’s FTSE100 index fell 12.6 per cent while US Dow Jones Industrial Average declined 6.7 per cent.

The FBM KLCI fell 1.3 per cent to 1,669.78 points last week on profit taking after a two-week rally before the end of last year. Market sentiment was generally weak on lack of catalysts. Most other markets closed higher except for the local market and Japan.



Trading volume was firm as compared to the previous week but the trading value has declined significantly. This indicates more lower prices stocks were being traded and hence lack of institutional participation. The average daily trading volume has risen 1.9 billion from 1.6 billion shares in the previous week but the average daily trading stayed firm at RM1.2 billion.

Both local and foreign and local institutions were net sellers and local retail was net buy. Net buy from local retail was RM65.6 million. Net sells from local and foreign institutions were RM47.3 million and RM18.3 million respectively.

In the FBM KLCI, decliners beat gainers 11 to 4. The top gainers were Westports Holdings Bhd (2.8 per cent in a week to RM3.74), Hong Leong Financial Group Bhd (2.1 per cent in a week to RM19.26) and MISC Bhd (1.4 per cent to RM6.67). The top three decliners were Press Metal Aluminium Holdings Bhd (5.6 per cent to RM4.55), Dialog Group Bhd (5.5 per cent to RM2.91) and Axiata Group Bhd (4.3 per cent to RM3.80).

Global markets were generally bullish except for Japan and the local market. In Asia, market indices closed marginally higher while European and US market indices closed at an average of 1.5 per cent higher.

The slightly weakened against major currencies. The Index declined to 96.2 points last Friday from 96.4 points the week before. The Malaysian ringgit strengthened to RM4.13 to a as compared to RM4.15.

In the commodities market. prices rose for the third week on uncertainty. (COMEX) increased 0.2 per cent from the previous week to US$1,286.20 an ounce last Friday.

Crude oil snapped a three-week decline and surged 9.9 per cent to US$57.42 per barrel. Crude palm oil (BMD) also rebounded and increased 2.5 per cent to RM2,171 per metric ton last Friday.

Last week, I mentioned that the FBM KLCI may test the next resistance level at 1,702 points before pulling back for a correction. The index was 1 point short of hitting the resistance level before it pulled back.



Technically, the FBM KLCI is bearish in the short term as it fell below the short term 30-day moving average. It rose above the moving average two weeks ago. The whipsaw on the short-term moving average indicates uncertainty in the short-term. However, the index is still bearish in the long term below the 200-day moving average and the Ichimoku Cloud indicator.

Momentum indicator were mixed. The RSI and Momentum Oscillator has fallen below their mid-levels. However, the MACD indicator was still above its moving average. This indicates a weak bearish market trend.

We may see some rebound this week after a 3.3 per cent gain in the US Dow Jones Industrial Average last Friday. The FBM KLCI may test 1,700 points again this week and if it fails to break above this level, the trend is still bearish and further declines are expected.

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.

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Source: Borneo Post Online



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