Market to stage a rebound
The FBM KLCI declined for the second week as the market was cautious ahead of Donald Trump’s inauguration as the US President last Friday. However, the market was supported after a decline last Monday and ringgit strengthened. The FBM KLCI declined 0.4 per cent in a week to 1,664.89 points last Friday.
Trading volume declined last week after weeks of gains. The average daily trading volume last week was 1.9 billion shares as compared to 2.5 billion shares two weeks ago. The average daily trading value fell to RM1.9 billion from RM2.1 billion two weeks ago. The total market valuation declined RM8 billion from the previous week to RM1,690 billion last Friday.
Market participation’s trading was mixed last week with local institutions emerged as the only net buyers in Bursa Malaysia. Net buy from local institutions was RM189 million. Net sells from foreign institutions and local retail were RM143 million and RM46 respectively. The ringgit strengthened from RM4.46 to RM4.44 to a US dollar last Friday.
In the FBM KLCI, decliners beat gainers two to one with six counters unchanged . The top gainers for the week were Astro Malaysia Holdings Bhd (1.9 per cent in a week to RM2.73), Genting Bhd (1.1 per cent to RM8.35) and CIMB Group Holdings Bhd (0.4 per cent to RM4.84). The top decliners were Petronas Gas Bhd (3.2 per cent to RM20.14), Maxis Bhd (2.8 per cent to RM5.99) and Hong Leong Financial Group Bhd (1.9 per cent to RM14.70).
Last week, most markets were generally mixed and directionless. Shanghai SSEC index closed marginally higher while most if the markets closed marginally lower. The US Dow closed marginally lower as the market remained cautious on Donald Trumps inauguration. However, the FTSE100 declined 1.7 per cent last week after six weeks of gains and hitting historical highs.
For major commodities, crude oil remained nearly unchanged.
The US dollar index fell for the fourth week from 101.2 points a week ago to 100.8 points last Friday. Meanwhile in the local market, crude palm oil futures closed marginally lower on stronger ringgit.
The index remained in a sideways correction as it continues to trade between the support and resistance levels between 1,650 points and 1,680 points. Last week, the index managed to find support at 1,658 points, which is where the long term 200-day moving average currently is.
Trend-wise, the index remained bullish above both the short and long term 30 and 200 day moving averages. The index tested the 200-day moving average a few times last week and was able to stay above it. The index also maintained above the Ichimoku Cloud indicator. However, the appearance of ‘doji’ candlestick chart patterns last week indicates uncertainty.
Momentum indicators like the RSI and Momentum Oscillator rebounded after declining last Monday. The indicators are still above its mid-level. This indicates a bullish sentiment but is still weak. Furthermore, the MACD indicator declined but is still above its trigger line and the FBM KLCI is pulling back towards the middle band of the Bollinger Bands indicator.
We continue to expect the market to continue its bullish trend after a correction. However, the market is still in its correction mode as the FBM KLCI trade within the sideways range between 1,650 and 1,680 points. With a higher support at 1,658 points last week and trend being technically bullish, we expect the market to stage a rebound this week and the FBM KLCI to test the immediate resistance level at 1,680 points.
The above commentary is solely used for educational purposes and is the contributor’s point of view using technical 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.