Market set to trend higher
The FBM KLCI closed higher for the third week last week on generally bullish global market performance.
The FBM KLCI increased 0.4 per cent in a week to 1,774.53 points, the highest level in 6 weeks.
Higher oil prices and slightly stronger ringgit helped to elevate market confidence. The market was also more active last week as compare to the previous week.
The average daily trading volume increased from 1.6 billion in the previous week to 1.8 billion shares last week.
The average daily trading value increased RM2 billion to RM2.1 billion. However, the total market capitalization fell RM2 billion in a week to RM1,849 billion last Friday.
Foreign institutions continued to be net buyers on slightly stronger ringgit.
The ringgit strengthened from RM4.28 to RM4.27 to a US dollar. Net buys from foreign institutions and local retail were RM151 million and RM57 million respectively.
Net sell from local institutions was RM208 million.
Gainers out-paced decliners 17 to 10 in the FBM KLCI. The top gainers for the week were Astro Malaysia Holdings Bhd (4.3 per cent in a week to RM2.65), Axiata Group Bhd (3.5 per cent to RM4.79) and Maxis Bhd (2.5 per cent to RM5.76).
The top decliners were IJM Corporation Bhd (1.7 per cent to RM3.42), AMMB Holdings Bhd (1.4 per cent to RM4.87) and Petronas Gas Bhd (1.4 per cent to RM18.70).
Asian markets performances were mixed. The Hong Kong market led the bullish markets with the Hang Seng Index continue to climb to a fresh two-year high.
Japanese market was directionless while China and Singapore markets pull back for a correction toward the end of last week.
The US Dow Jones Industrial Average continued to climb to record highs last week and the European markets followed US cue.
The US dollar was firm against major currencies.
The US dollar index snapped a three- week decline, marginally increasing from 93.3 points two weeks ago to 93.5 points last Friday. Gold price (COMEX) fell as the US dollar began to find support.
The price fell 0.4 per cent in a week to US$1,264.30 an ounce.
Crude oil (Brent) took a breather after a rally two weeks ago, falling 0.3 per cent in a week to US$52.46 per barrel.
Crude palm oil futures snapped a five week rally and declined 1.8 per cent to RM2,606 per metric tonne.
The FBM KLCI climbed back above the short term 30- day moving average for the second time in the past three weeks and this indicates that the bullish momentum is building up.
The index has passed its first resistance at 1,770 points and is set to test the next hurdle at 1780 points, which is the upper band of the Ichimoku Cloud indicator.
Momentum indicators are starting to indicate stronger bullish momentum.
The RSI and Momentum Oscillator, which have risen above their mid-levels two weeks ago, continued to climb higher last week. Furthermore, the MACD continued to rise and the FBM KLCI is now trading at the top band of the Bollinger Bands indicator.
The FBM KLCI is still in the Ichimoku Cloud indicator. However, the market is now starting to see more light in the cloud.
We mentioned last week that the market would be out of the bearish trend if the FBM KLCI can climb above 1,780 points.
With the stronger momentum seen last week, the market is set to trend higher.
There is now a higher chance that the index may break above 1,780 points immediate resistance.
A breakout above this level could bring the index higher to the next resistance levels at 1,800 and 1,850 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.