Bullish momentum building up
Bursa Malaysia ended on a bullish note last week. Banking stocks and Genting propelled the benchmark FBM KLCI to its highest close since May 2015.
The sentiment was also bullish as winds of general election getting stronger. Stronger ringgit has also helped boost market sentiment.
The FBM KLCI increased 1.5 per cent in a week to 1,756.05 points.
Trading volume declined in the bullish market and this indicates little selling pressure.
The average daily trading volume declined from 3.9 billion shares two weeks ago to three billion shares last week.
However, the average daily trading value rose from RM2.2 billion to only RM2.4 billion. The total market capitalization for Bursa Malaysia increased 22.8 billion in a week to RM1,821 billion last Friday.
Stronger ringgit continued to lure buying from foreign institutions.
Net buy from foreign institutions was RM283 million. Net sells from local institutions and retail were RM95 million and RM188 million respectively.
The weak US dollar performance caused the ringgit to strengthen from RM4.41 to RM4.40 per US dollar last Friday.
Gainers beat decliners three to one in the FBM KLCI. The top gainers for the week were AMMB Holdings Bhd (6.6 per cent in a week to RM5.17), Genting Malaysia Bhd (6.2 per cent to RM5.98) and Genting Bhd (5.3 per cent to RM9.74).
The top decliners were Petronas Gas Bhd (5.5 per cent to RM18.40), YTL Corporation Bhd (2.7 per cent to RM1.46) and Westports Holdings Bhd (1.7 per cent to RM3.99).
The Malaysian market increased in a mixed Asian markets performances.
This shows that the local market bullish performance was domestically driven.
China markets ( including Hong Kong) and Thailand fell while Singapore, Japan and Indonesia rose. In the west, US market was up while European markets fell.
The US dollar slightly weakened and gold was flat. The US dollar index fell from 100.6 points to weeks ago to 99.8 points last Friday.
Gold price fell 0.2 per cent to US$1,286 an ounce. Crude oil plunged 6.9 per cent to US$52.05 per barrel on rising US stockpiles.
Crude palm oil increased one per cent in a week to RM2,528 per metric ton last Friday after rebounding from an eight-month low last Wednesday.
After briefly breaking below the support level at 1,737 points two weeks ago, the market rebounded from the up trend support line to close at its highest level in nearly two years.
The FBM KLCI fell short of breaking above the immediate resistance level at 1,760 points.
The FBM KLCI climbed above its short term 30-day moving average after staying below it briefly. The index is back in the up trend in the short term.
In the long term, the index remained bullish above the long term 200-day moving average and the Ichimoku Cloud.
This indicates that the short term correction is over and the bullish trend is expected to continue.
Furthermore, momentum indicators turned bullish. The RSI climbed above its mid-level and the MACD indicator is about to cross above its moving average.
The index rose from the bottom band of the Bollinger Bands indicator to the top band and this indicates a strong bullish momentum.
Last week, the market showed indications of getting bearish. However, the market made a drastic turn this week with a strong bullish performance.
A bullish ‘Marubozu’ Japanese candlesticks chart pattern on the weekly chart indicates strong bullish momentum.
This, together with bullish technical indications, set a bullish stage for the FBM KLCI.
The FBM KLCI is expected to climb to test the next resistance level at 1,780 points, based on the up trend channel resistance line, as long as the index stays above the immediate support level at 1,737 points.
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.