FBM KLCI expected to trend higher to 1,740 points
The market rebounded after US President Donald Trump’s inaugural congress speech last week and the FBM KLCI closed at a 10-month high last Thursday. However, the price pulled back last Friday on profit taking and erased some gains. The benchmark index rose 0.6 per cent in a week to 1,708.38 points.
Trading volume continued to increase last week but the trading value remained firm. This indicates more retail participation as lower capped stocks are normally traded by retail. The average daily trading volume increased from 2.9 billion two weeks ago to 3.1 billion shares last week. The average daily trading value remained firm at RM2.7 billion. The total market valuation increased RM10 billion from the previous week to RM1,7454 billion last Friday.
Local and foreign institutions were net buyers last week. Net buys from local and foreign institutions were RM33 million and RM121 respectively. Net sell from local retail was RM154 million. The ringgit slightly weakened against the US dollar from RM4.44 in the previous week to RM4.45 to a US dollar last Friday.
In the FBM KLCI, gainers beat decliners 17 to 12. The top gainers for the week were Axiata Group Bhd (7.7 per cent in a week to RM4.62), AMMB Holdings Bhd ( 6.1 per cent to RM4.91) and Sapurakencana Petroleum Bhd (3.7 per cent to RM1.97). The top decliners were Petronas Gas Bhd (3.6 per cent to RM19.80), British American Tobacco (M) Bhd (2.2 per cent to RM48.20) and Astro Malaysia Holdings Bhd (2.1 per cent to RM2.82).
Asian markets were mixed last week. The China markets (including Hong Kong) declined. Markets in the west followed US bullish cue after US President Donald’s Trump’s speech that gave some market confidence. The US and London markets made another historical high last week before marginally pulling back for a correction. The Germany’s DAX climbed to a fresh 22 months high.
The US dollar index ( that weighs the US dollar against a basket of major currencies) closed marginally higher from 101.12 points to 101.34 points last Friday. Crude oil (Brent) rose remained directionless last week. Gold price pulled back after increasing for four consecutive weeks and fell 1.8 per cent in a week to US$1,235 an ounce. In the local market, crude palm oil rebounded and closed 2.2 per cent higher to RM2,863 per metric ton.
The FBM KLCI remained in the sideways trading range between the immediate support level at 1,680 and immediate resistance at 1,720 points. The index tested the immediate resistance.
Trend- wise, the FBM KLCI remained bullish above the short and long term 30 and 200 day moving averages, and also above the Ichimoku Cloud indicator. The index is expected to trend higher as the Ichimoku Cloud is expanding.
Momentum indicators like the RSI and Momentum Oscillator increase marginally and are above their mid-level. This indicates a bullish market sentiment but because of the marginal increase, the sentiment is weak. Furthermore, the MACD indicator is still below its moving average but it is about to cross above it.
We have expected the market to extend its bullish trend correction last week and the index continued to trade between the sideways trend immediate support and resistance level. The FBM KLCI managed to hold above the moving average at 1,688 points and rebounded. This indicates good support for the short term up trend.
The FBM KLCI is expected to test and break above the immediate resistance level at 1,720 points and if this level is taken out, we expect to see the FBM KLCI climbing to the next resistance level at 1,740 points.
The above commentary is solely used for educational purpos e s 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.