Further consolidation expected
The equity market rebounded as expected last week on bargain hunting. The index fell to its lowest in 27 months and this attracted some buying.
However, sentiment was still not bullish enough to reverse the downtrend. The FBM KLCI fell one per cent in a week to 1,638.38 points.
However, trading volume has increased significantly. The average daily trading volume has increased to 4.1 billion shares last week from three billion shares the week before.
The average daily trading value rose to RM3 billion from RM2 billion. This indicates that more lower-capped stocks were being traded and retail investors normally trade these stocks.
After weeks of decliners beating gainers in the FBM KLCI, gainers finally out-paced decliners 19 to eight.
The top three gainers were Malaysia Airports Holdings Bhd (10.6 per cent in a week to RM7.49), Hartalega Holdings Bhd (5.9 per cent to RM5) and Press Metal Aluminium Holdings Bhd (5.6 per cent to RM4.75).
The top three decliners were Petronas Dagangan Bhd ( 2.2 per cent to RM24.18), Digi.com Bhd (2.2 per cent to RM4.55) and Westports Holdings Bhd (2.1 per cent to RM3.79).
Global market indices closed generally mixed last week. In Asia, Chinese markets including Shanghai and Hong Kong fell into the red while other markets closed marginally higher.
Markets in Europe, US and the US were mixed. US and UK fell while Germany closed higher.
The US dollar continued to strengthened against major currencies last week. The US dollar Index increased to 98.1 points last Friday from 97.4 points in the previous week. The Malaysian ringgit was unchanged at RM4.13 per dollar last Friday as compared to the previous week.
Gold prices rose marginally higher last week as sentiment.
COMEX gold futures increased 0.8 per cent in a week to US$ 1,288.40 an ounce last Friday.
However, Crude oil (Brent) fell
0.5 per cent to US$71.60 per barrel. Crude palm oil (BMD) declined 3.2 per cent in a week to RM2,119 per metric ton.
The FBM KLCI rebounded back and climb above its broken support now turned resistance level at 1,630 points.
If the price can stay above this level, the market is expected to turn bullish.
Next support and resistance levels are at 1,600 points and 1,650,
Despite the rebound the FBM KLCI remained technically bearish below both the short-term and long-term 30- and 200-day moving averages.
The index is also below the Ichimoku Cloud indicator and the Cloud is expanding downwards. Furthermore, short term up and down swings are getting lower.
The bearish momentum has also rebounded last week. The RSI and Momentum Oscillator increased higher but still below its mid-level.
This indicates that the bearish trend is weakening. The MACD indicator is above its moving average and this indicates that the bullish sentiment is gaining traction
Further consolidation of a bearish trend is expected if the FBM KLCI stays between the immediate support level at 1,630 and resistance at 1,650 points.
The FBM KLCI may climb high and turn bullish if it can break above 1,650 points.
The index is expected to trend higher towards 1,700 points if it can stay above 1,630 points.
However, if the index fails to climb above this level, the bearish trend may extend and the index may test 1,600 points.