Market set to trend higher
After a bearish start in the Chinese new year of the rooster, the market turned bullish in the past one week on better market sentiment as the commodities prices such as crude oil and crude palm oil rose. Bullish performances in the global market also helped boost confidence. The FBM KLCI increased 0.8 per cent in a week to 1,698.94 points last Friday.
The retail market participation increased significantly last week. Overall, the trading volume increased sharply. The average daily trading volume increased from 1.7 billion two weeks ago to 2.5 billion shares last week. The average daily trading value increased from RM2.1 billion to RM2.4 billion. The total market valuation increased RM23 billion from the previous week to RM1,741 billion last Friday.
Foreign institutions turned net buyers in Bursa Malaysia last week. Net buy from foreign institutions was RM297 million. Net sells from local institutions and local retail were RM286 million and RM11 respectively. The ringgit slightly weakened from RM4.43 in the previous week to RM4.44 to a US dollar last Friday.
In the FBM KLCI, gainers beat decliners two to one. The top gainers for the week were Sapurakencana Petroleum Bhd (6.3 per cent in a week to RM1.85), Hap Seng Consolidated Bhd (5.1 per cent to RM9.12) and Maxis Bhd (3.9 per cent to RM6.35). The top decliners were Westports Holdings Bhd (2.1 per cent to RM4.13), Astro Malaysia Holdings Bhd (1.1 per cent to RM2.80) and Hong Leong Bank Bhd (one per cent to RM13.26).
Global markets were bullish last week led by the US market. The US DOW rose to historical high last Friday. Markets were climbing to multi-month highs as investors started to adjust their portfolio for this year ahead of earning reports.
Crude oil was directionless last week as the market went into a correction after a bullish rally two weeks ago. The price pulled back from its four-week high to close 0.2 per cent lower in a week at US$56.70 last Friday. The US dollar index fell for the sixth week from 99.9 points a week ago to 100.7 points last Friday. In the local market, crude palm oil rose 0.8 per cent in a week to RM3,078 per metric tonne.
After gaining good support two weeks ago, the FBM KLCI started to rally and test the sideways resistance level at 1,695 points. The index managed to break and stay above this level. However, the index is still hesitant to break above the psychological resistance level at 1,700 points.
Trend-wise, the index is bullish above both the short and long term 30 and 200 day moving averages. The index also remained above the Ichimoku Cloud indicator and the rising and expanding Cloud indicates that the index should be climbing higher at least in the next one month. There are no indications of resistance.
Momentum indicators like the RSI and Momentum Oscillator have increased above their midlevels. This indicates that the bullish sentiment is gaining strength. The MACD indicator started to climb last week. Furthermore, the index is trading at the top band of the Bollinger Bands indicator. These indicators show a strong bullish momentum.
With the breakout or resistance levels and a strengthening bullish momentum, we expect the FBM KLCI to climb higher. The index should climb above the 1,700 points resistance level and test the next resistance level at 1,730 points.
Institutional investors may start to re-balance their portfolio ahead of the earnings report and it looked like there is some accumulation, especially in the oil and gas, plantation and telecommunications sectors. However, we also expect volatility as market make fresh highs.
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 an investment advice or any form of recommendation. Should you need investment advice, please consult a licensed investment advisor.