Happy ending for the market this year
The FBM KLCI started on a bearish note early last week as the market took profits after a strong advance two weeks ago. However, market sentiment continued to be bullish and the index rebounded to close higher week on week. The FBM KLCI increased 0.4 per cent in a week to 1,760.24 points last Friday after rebounding from a low of 1,732.93 points.
Trading volume was higher last week but the value fell. This indicates institutional market participation has eased. The average daily trading volume increased to 2.5 billion shares from 2.4 billion shares two weeks ago. However, trading volume fell last Friday at 1.7 billion shares ahead of the longer weekend. The average daily trading value fell to RM2.5 billion from RM3.1 billion two weeks ago.
The market participation was quite mixed last week. Local institutions were net buyers at RM86.2 million while net sells from foreign institutions and local retail were RM38 million and RM48 million respectively.
Last week, gainers out-paced decliners 17 to 11 in the FBM KLCI. The top gainers for the week were Telekom Malaysia Holdings Bhd (+ 6.6 per cent to RM6.50), Petronas Gas Bhd (+5.3 per cent to RM17.10) and Westports Holdings Bhd (+4.8 per cent in a week to RM3.74). The top decliners were RHB Bank Bhd (-3.7 per cent to RM4.93), Tenaga Nasional Bhd (-3.0 per cent to RM14.98) and AMMB Holdings Bhd (-2.9 per cent to RM4.33).
The bullish local market performance was in line with global markets performances. In Asia, Hong Kong took the leak as the Hang Seng Index rose 2.5 per cent in a week. However, Singapore Straits Times index fell 0.9 per cent. The US Dow Jones Industrial Average rose to historical high last week but was directionless. European markets were also mixed but London’s FTSE100 index rose to a record high.
The US dollar slightly weakened against major currencies last week. The US Dollar Index fell to 93.3 points last Friday from 93.9 points a week before. The Malaysian Ringgit stayed firm against the US Dollar at RM4.08 for a US Dollar last Friday.
Prices of major commodities rose last week. Crude oil (brent) increased 2.8 per cent in a week to US$65.04 per barrel, the highest since June 2015. Gold (COMEX) rose 1.7 per cent to US$1,279.10 an ounce. In the local market, however, Crude palm oil futures fell 2.3 per cent in a week to close at RM2,458 per metric tonne last Friday on demand worries.
The FBM KLCI pulled back after testing the Ichimoku Cloud last week but rebounded to test the cloud again. The index is at the top band of the Ichimoku Cloud indicator and this indicates that the index is set to continue its bullish trend.
When the FBM KLCI pulled back last week, it was still above the short term 30-day moving average and above the immediate support level at 1,730.0 points. Furthermore, the index also climbed above the long term 200day moving average.
Momentum indicators like the RSI, MACD and Momentum Oscillator continued to rise and stay above the bullish zone. This indicates that the bullish momentum is strengthening. Furthermore, the Bollinger Bands are expanding the index is trading at the top band. The ADX indicator is also rising, indicating good bullish momentum
The market is strongly bullish as it continues to climb and break resistance levels. The technical indicators are showing strong bullish momentum and hence the FBM KLCI is expected to continue its bullish trend. The next resistance level to test is 1,780 points and the bullish momentum is expected to continue as long as the index is expecged to stay above the immediate support level at 1,733 points.
The market is bound to have a happy ending this year after 3 years of decline. Furthermore, we expect the index to close higher than 2014’s close at 1,761.25 points. As the year comes to an end, I would like to wish everyone a Merry Christmas and Happy New Year. May next year be a better year and I strongly believe it will.