Market to remain bullish ahead
The equity market continued to climb higher last week after a rebound two weeks ago. The FBM KLCI rose to its highest level in two years, following other equity markets that have climbed to multi and historical highs. Stronger exports data and Ringgit helped boost market sentiment.
The FBM KLCI increased 0.7 per cent in a week to 1,788.89 points last Friday.
Trading volume continued to decline. The average daily trading volume fell from 2.5 billion shares two weeks ago to 2.3 billion shares last week.
However, the average daily trading value declined from RM2.9 billion to RM2.6 billion. Total market capitalization rose RM12 billion in a week to RM1,860 billion.
Foreign institutions remained as net buyers in Bursa Malaysia. Netbuysfromforeigninstitutions was RM250 million while net sell from local institutions was RM252 million respectively.
Gainers out-paced decliners 2 to 1 in the FBM KLCI. The top gainers for the week were Tenaga Nasional Bhd (+4.4 per cent in a week to RM14.40), Hong Leong Bank Bhd (+3.5 per cent to RM15.20) and British American Tobacco (M) Bhd (+2.9 per cent to RM45.60).
The top decliners were Astro Malaysia Holdings Bhd (-3.5 per cent to RM2.52), Genting Bhd (-2.3 per cent to RM9.76) and AMMB Holdings Bhd (-1.8 per cent to RM5.00).
Regional Indices
Global Markets performances were mixed last week. Most markets in Asia were bullish except Japan. The Hong Kong Hang Seng index continues to climb to a fresh 23-month high.
China’s SSEC index rose to a one- month high. Markets in Europe pulled back for a correction after climbing to historical two weeks ago while the US Dow Jones Industrial Average continued to rise to historical highs.
Commodities
The US dollar has strengthened against major currencies. The US Dollar Index increased from 96.7 points to 97.3 points last Friday.
However, the Malaysian ringgit strengthened from RM4.28 to RM4.26 to a US dollar. Prices of commodities generally fell last week.
COMEX gold increased 1.0 per cent in a week to US$1,268.80 an ounce. Crude oil (Brent) fell 3.3 per cent to US$48.30 per barrel. Crude palm oil declined 1.7 per cent in a week to RM2,453 per metric ton last Friday.
Observations
The FBM KLCI broke above the sideways trend resistance level at 1,780 points as we have expected. This indicates that the sideways correction is over and the bullish trend should continue.
There are no changes to the trend indicators on the FBM KLCI chart.
The index remained above the short and long term 30 and 200day moving averages, up trend channel support line and the Ichimoku Cloud.
The breakout above the resistance level shows that the market sentiment is still bullish.
Furthermore, the RSI indicator and Momentum Oscillators are increasing.
This indicates that the bullish trend momentum is strong.
The MACD indicator has also climbed above its moving average.
The bullish momentum is starting to gain traction last week after the index broke above the immediate resistance at 1,780 points.
Furthermore, strong Ringgit remains a catalyst for luring more foreign institutions buying.
However, weaker commodities prices could provide some resistance.
Nevertheless, the chart shows that the FBM KLCI is set to climb higher towards the next resistance levels at 1,800 and 1,860 points especially if the index can stay above 1,780 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.