Market finds shelter

REVIEW: Against the bullish US market backdrop, Bursa Malaysia opened the week on a “concrete platform”, with the FBM KLCI spiking a significant 4.12 points to 1,759.12 amid follow-through support from investors.

As usual, blue chips led the way, underpinned further by a steadier regional trend and soon, the key index rose to a high of 1,759.52.

But sadly, the positive momentum in early business was quick to puncture, simply because the bulls could not attract enough followers to drive them to a higher ground as the market was generally still in correction.

In the wake of an apparent bout of profit-taking selling, the local bourse retreated and subsequently treaded waters near the flat line for the rest of the day.

At the final bell, the key index gained 0.19 point to 1,755.19 in mixed note, with decliners beating winners by 441 to 417 on Monday.

After a strong rally, the bulls on Wall Street paused for air and in the Asia-Pacific region, trading was subdued the next day, as the passage of a US healthcare bill grew doubtful and raised concerns over the rest of President Donald Trump’s ambitious economic agenda.

Meanwhile, crude oil prices reversed down and it was not helping equities while investors searched for more clues that supplies cut by the members of the Organisation of the Petroleum Exporting Countries (Opec) and non-members since January were working well.

In the absence of a compelling lead, the local bourse moved sideways, flirting within a fairly tight 5.57 points range throughout before settling down 0.27 point to 1,754.92 in sluggish session.

Despite the negative close, the overall market breadth was positive, with advancers beating losers by 457 to 385 on Tuesday.

Come Wednesday, Wall Street stayed in correction mode, losing 54.99 points to 21,574.73, dragged by a drop in Goldman Sachs after reporting a 40% fall in bond trading revenus and posted the weakest commodities results in its history as a public company while Trump faced a battle to push through his much-vaunted economic agenda.

Surprisingly, Asian equity traders were unfazed about that, and stock markets rallied, as investors took comfort of the latest economic numbers filtered out from Chine, showing robust growth in the second-largest economy, to bid up the blue chips.

Riding on the strength of the regional peers, the local bourse drifted higher on renewed buying interest, but surely underperformed, with the FBM KLCI chalking up only 2.35 points to 1,757.27 in mid-week.

After a brief correction process, Wall Street bounced back to establish a fresh record and Asian markets scaled to the highest level in almost a decade, boosted by solid US corporate earnings.

Elsewhere, crude oil prices firmed on bigger-than-expected US drawdown.

In an unprecedented move, trading on the local bourse was a letdown, dampened by profit-taking selling and declines in certain blue chips dragged the FBM KLCI down 1.64 points to 1,755.63 on Thursday.

In another range-bound pattern, Bursa Malaysia eked out a small gain, up 3.53 points to 1,759.16, lifted by late buying in select blue chips yesterday.

Statistics: Week-on-week basis, the benchmark index notched up 4.16 points, or 0.2% to 1,759.16 yesterday, compared with 1,755.00 on July 14.

Total turnover for the week amounted to 9.962 billion shares valued at RM10.012bil, against 9.299 billion units worth RM9.291bil traded a week ago.

Outlook: The local bourse continued to stay in correction mode despite the FBM KLCI snapping the four straight weeks of declines amid light bargain hunting nibbling.

While the MSCI broadest index of AsiaPacific shares outside Japan gained about 5% in the past two weeks and MSCI gauge of stocks across the globe rose for the a 10th straight session, the longest rally since February 2015 and advanced 3.1% before snapping the winning streak yesterday, underpinned by solid global growth and bright earnings outlook, trading at home was simply lacklustre and underperformed in cautious mood.

The uninspiring trading in the local market against a bullsih overseas backdrop the past week, certainly was unusual and pending a clearer picture to emerge, it is best investors exercise care in their trading approach.

Based on the daily chart, it appears the key index had found a shelter slightly above the 1,750-point level and given the prevailing offshore tone keeping the bullish sentiment, there is a ray of hope Bursa Malaysia may ride on the overseas peers’ strength and trade higher on relief recovery process this week.

A breach of the 21-day simple moving average (SMA) of 1,763 points will propel the key index up to challenge the uppermost 50-day SMA of 1,771. The next upper hurdle is expected at the 1,800-point psychological barrier.

Apparently, the downward pressure on the daily moving average convergence/divergence histogram had eased and with the weekly slow-stochastic momentum index reaching the oversold area, they suggest more technical rebound may be in the pipeline.

Initial support is maintained at 1,750 points, of which a crack will see the lower 1,700-point level becoming vulnerable.