Market lacked catalyst but still being supported
The market started on a bullish note last week but pulled back as it lacked catalyst. However, the market is still being supported as the FBM KLCI rebounded last Friday after testing the sideways range support level at 1,737 points. The FBM KLCI managed to increase only 0.1 per cent in a week to 1,741.72 points and is in line with the slightly bullish markets performances in the region.
Trading volume increased last week with trading volume slightly above five billion shares last Friday. The average daily trading volume increased from 3.4 billion shares two weeks ago to 4.2 billion shares last week and the average daily trading value rose from RM2.8 billion to RM3.2 billion.
Foreign institutions continued its buying streak. Net buy from foreign institutions was RM645 million. Net sells from local institutions and retail were RM585 million and RM60 million respectively. The weaker ringgit is seen as a catalyst for foreign institutions to find bargains. The ringgit was at RM4.43 last Friday as compared to RM4.42 the week before.
Decliners beat gainers in a tight margin of 14 to 13. The top gainers for the week were Sapurakencana Petroleum Bhd (9.9 per cent in a week to RM2), AMMB Holdings Bhd (4.3 per cent to RM4.85) and YTL Corporation Bhd (two per cent to RM1.52). The top decliners were Genting Bhd (two per cent to RM9.40), CIMB Group Holdings Bhd (two per cent to RM5.46) and Digi.com Bhd (0.8 per cent to RM5.09).
Asian markets mildly rebounded on a week to week basis and were led by China, which its Shanghai Shares Composite Index rising two per cent in a week to 3,287.02 points. However, Japan’s Nikkei 225 fell 1.3 per cent to 18,664.63 points.
US and European markets ended up mixed. Germany’s DAX Index pulled back after climbing to historical high two weeks ago while France’s CAC40 Index climbed to a 20-month high last week.
The US dollar index, which measures the US dollar against a basket of major currencies, increased slightly from 100.56 points to weeks ago to 101.13 points last Friday. Crude oil ( Brent) continued its bullish rally and increased 4.8 per cent in a week to US$55.26 per barrel. Gold (COMEX) increased only 0.4 per cent in a week to US$1,256.10 an ounce. Crude palm oil futures (June contract) closed marginally higher at RM2,655 per metric tonne.
The market lacked catalyst and the FBM KLCI continued to be directionless and trade between the sideways support level at 1,737 and resistance level at 1,760 points.
However, the FBM KLCI is still bullish above the short and long term 30 and 200 day moving averages. The short term 30-day moving average is currently ay 1,733 points while the 200-day moving average is at 1,672 points. Furthermore, the index remained above the Ichimoku Cloud indicator and the increasing Cloud indicator indicates that the trend is still being supported well.
Momentum indicators continued to show weak momentum for the up trend. The RSI and Momentum indicators is falling towards their mid-levels and the MACD indicator remained below its trigger line or moving average. Furthermore, the Bollinger Bands are also squeezing and the FBM KLCI is at the middle band.
There is not much change to the technical indicators. However, the market continued to be supported and the rebound last Friday on high volume indicates further accumulation. There is still a chance for the market to rally towards 1,800 points after this correction if the FBM KLCI continues to stay above the support level at 1,737 points. However, a breakout below this level could bring the index down to 1,720 points, the up trend line support level.
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.