Market set to stage a rebound
The FBM KLCI declined for the third week last week amid pressures from regional markets performances.
However, the market rebounded to recover earlier losses on bargain hunting after news from Bank Negara that the Malaysian economy grew 4.5 per cent in the firth quarter of 2019.
However, market confidence is still weak as the Malaysian ringgit continued to weaken against the US dollar and this caused more foreign institutions selling in the local market.
The FBM KLCI fell only 0.3 per cent in a week to 1605.36 last Friday after rebounding from an intraday of low 1,572.03 points last Tuesday.
Trading volume has slightly decline last week. The average daily trading volume has declined to 2.5 billion shares last week from 2.6 billion shares the week before. The average daily trading value, however, increased to RM2.3 billion from RM2 billion.
Selling from foreign institutions accelerated last week as compared to the previous weeks. Net sell from foreign institutions was RM 1,179.3 million. Net buys from local institutions and retail were RM1,123.3 million and RM56 million respectively.
In the FBM KLCI, decliners out-paced gainers 17 to 10. The top three gainers were Dialog Group Bhd (5.1 per cent in a week to RM3.30), Hartalega Group Holdings Bhd (4.3 per cent to RM5.10) and Top Glove Corporation Bhd (four per cent to RM4.94).
The top three decliners were Genting Bhd (3.9 per cent to RM6.50), Press Metal Aluminium Holdings Bhd (3.2 per cent to RM4.30) and Westports Holdings Bhd (three per cent to RM3.55).
Global markets performances were mixed. Markets in Asia closed generally lower while most markets in Europe including the UK gained. The US markets declined well.
US dollar has strengthened against major currencies. The US dollar Index rose to 98.0 points last Friday, the highest in one year from 97.3 points in the previous week.
The Malaysian ringgit weakened to RM4.18 per US dollar as
compared to RM4.15 per dollar in the previous week. The ringgit was the weakest against the greenback since December 2018
Major commodities prices were mixed. COMEX gold futures declined 0.7 per cent in a week to US$1,277.40 an ounce last Friday. Crude oil (Brent) increased 1.8 per cent to US$72.17 a barrel.
Crude palm oil ( BMD) rebounded after weeks of declines an increased 5.6 per cent in a week to RM2,096 per metric tonne.
The FBM KLCI broke a few technical support levels last week. The next technical support level after 1,610 points is at 1,540 points. The index broke below 1,610 points and fell to its lowest at 1,572 points before rebounding. The index is still below 1,610 points, which now turns immediate resistance.
The market trend remained bearish as the FBM KLCI is still below both the short-term and long-term 30- and 200-day moving averages. Furthermore, the index is below the Ichimoku Cloud indicator but the Cloud width begins to slightly narrow down.
The bearish trend momentum was strong at the beginning of last week but turned weak after the rebound in the second part of the week.
The RSI and Momentum Oscillator began to rebound from their oversold levels.
However, the MACD indicator remained bearish below its moving average.
The market remained technically bearish but is also slightly oversold after three weeks of declines.
The oscillator indicators began to rebound and this indicates that the FBM KLCI is set to stage a technical rebound.
The index may test the immediate resistance level at 1,610 points and even to 1,630 points where the 30-day moving average currently is. However, the trend shall remain bearish if the index stays below 1,630 points.