Bullish trend stays well supported
The Malaysian market bucked global markets performances last week. The FBM KLCI climbed to a fresh two year high last week but failed to rally as the bearish global markets performances weigh down sentiment. Generally, the bullish trend is still being supported well because the raise in US interest rates have no impact to the markets. Normally, interest rates are a bearish catalyst for equity markets.
The FBM KLCI increased only 0.1 per cent in a week to 1,791.31 points last Friday. Trading volume continued to decline as the Ramadan period is coming to an end and the Aidil Fitri celebration is just around the corner.
The average daily trading volume fell from 2.2 billion shares two weeks ago totwo billion shares last week.
However, the average daily trading value increased from RM2.6 billion to RM2.7 billion. This indicates that trading was dominated by institutions (who trade higher-capped counters).
After weeks of buying, foreign institutions became net sellers last week in Bursa Malaysia. Net buy from local institutions was RM136 million.
Net sells from foreign institutions and local retail were RM100 million and RM36 million respectively.
Gainers pared decliners in the FBM KLCI. The top gainers for the week were Astro Malaysia Holdings Bhd (5.2 per cent in a week to RM2.65), Hong Leong Bank Bhd (2.8 per cent to RM15.62) and Kuala Lumpur Kepong (M) Bhd (two per cent to RM25.30). The top decliners were Maxis Bhd (five per cent to RM5.88), Hap Seng Consolidated Bhd (4.5 per cent to RM8.79) and Sapura Energy Bhd (2.7 per cent to RM1.84).
Global Markets performances were generally bearish last week. However, the US markets climbed to historical high despite the rise in interest rates. The Dow Jones closed at a record high at 21,384.28 points last Friday.
The US Dollar was firm against major currencies. The US Dollar index was at 97.1 points last Friday from 97.3 points the week before. The Malaysian Ringgit slightly weakened from RM4.26 to RM4.27 to a US Dollar.
Prices of commodities ended lower last week. COMEX gold declined 1.1 per cent in a week to US$1,255.20 an ounce. Crude oil (Brent) fell 2.1 per cent to US$47.29 per barrel.
However, crude palm oil rebounded and closed 2.6 per cent higher in a week to RM2,453 per metric tonne last Friday.
The FBM KLCI managed to stay above the resistance turned immediate support level at 1,780 points. This indicates that the bullish trend is still being supported well. The immediate resistance level is at 1,800 points.
Technically, the FBM KLCI is bullish as the index is above the short and long term 30 and 200day moving averages, up trend channel support line and the Ichimoku Cloud.
The Ichimoku Cloud is still rising moving forward but the width is narrowing. This indicates that the bullish trend momentum is slightly weakening.
Momentum indicators are showing mixed indications. The RSI indicator and Momentum Oscillators are in a bearish divergence against the FBM KLCI (Rising FBM KLCI, falling momentum indicators). However, the MACD indicator is still above its moving average and the Bollinger Bands expanding. This indicates that uncertainty and this is confirmed with the “doji” Japanese candlesticks chart pattern on the weekly chart.
The market sentiment is bullish and this is shown in the increase in the FBM KLCI in the past three weeks.
However, the bullish momentum is weakened by bearish markets performances and the lack of volume.
I continue to expect the FBM KLCI to continue climb higher towards the next resistance levels at 1,800 and 1,860 points if the index can stay above the immediate support level at 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.