Market still top-ish
The market pulled back on weaker ringgit and the rise in interest rates by the Federal Reserve. Markets performances were mixed globally. Rebounds in commodities prices especially crude oil and crude palm oil help lifted some market confidence. The FBM KLCI declined one per cent in a week to close 1,793.15 points last Friday.
Trading volume continued to shrink last week as market was uncertain. The average daily trading volume has declined to two billion from 2.1 billion shares in the previous week and the average daily trading value fell to RM2.5 billion from RM2.6 billion. This indicates more higher-capped stocks were being traded.
Foreign institutions continued to be net buyers while local sellers, both retail and institutions, were net sellers. Net buy foreign institutions was RM212 million while net sells from local institutions and local retail were RM162 million and RM50 million respectively.
In the FBM KLCI, decliners beat gainers 13 to five. The top three gainers were Westports Holdings Bhd (2.5 per cent in a week to RM3.80), IOI Corporation Bhd (1.3 per cent to RM4.54) and MISC Bhd (one per cent to RM6.06).
The top three decliners were Press Metal Aluminium Holdings Bhd (3.4 per cent to RM4.86), CIMB Group Holdings Bank Bhd (3.1 per cent to RM6.01) and Hong Leong Financial Group Bhd (2.9 per cent to RM19.30).
Global markets performances were mixed. In Asia, the FBM KLCI and Hong Kong’s Hang Seg index closed lower while most of the others were in the green. In Europe, most markets ended lower.
The US Dow Jones Industrial Average also closed lower after hitting a historical high two weeks ago.
US dollar bucked the bearish trend and increased after the Federal Reserve raised the key interest rate. The US dollar Index increased to 95.1 points last Friday from 94.2 points the week before. The Malaysian ringgit weakened slightly against the US dollar at RM4.14 to a US dollar as compared to RM4.13 in the previous week.
Gold fell on the interest rate hike. Gold (COMEX) declined 0.3 per cent in a week to US$1,196.20 an ounce last Friday. Oils, however, closed higher. Crude oil (Brent) jumped 5.0 per cent to US$82.70 a barrel, the highest in nearly four years. Locally, crude palm oil futures rebounded from a two-week decline to close 1.4 per cent higher at RM2,170 per metric tonne.
The FBM KLCI continued to trade within the immediate support and resistance levels of a bullish trend correction at 1,780 and 1,820 points. This indicates that the correction is not over.
The FBM KLCI has fallen below both the short and long term 30- and 200-day moving averages. This indicates a bearish trend. However, the index has been rising above and falling below these moving averages in the past one month.
This whipsaw on the moving indicates uncertainty. Nevertheless, the market still bullish as the index stays above a wide Ichimoku Cloud indicator.
Momentum indicators continued to indicates a good bearish momentum. Momentum indicators like the RSI and Momentum Oscillator continued to decline and stayed below their mid-levels. Also, the MACD indicator has fallen below its moving average.
In conclusion, the market does not provide any directional bias at the moment. As long as the index stays between 1,780 and 1,820 points, the market is expected to remain uncertain.
However, a breakout below the support level (which is also the confirmation level of the head and shoulders chart pattern) at 1,780 points, then we may expect a bigger correction and the next support level is at 1,720 points. The index may remain bullish is it stays above the support level.
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.