Bullish trend expected to extend
The market was expected to pull back for profit taking but the market continued to be supported and the index closed higher. Bullish markets performances globally has helped boost market confidence. Foreign institutions kept selling but the support came from local institutions.
The FBM KLCI increased 0.8 per cent in a week to 1,769.14 points last Friday.
Trading volume has increased last week especially for lowercapped stocks. The average daily trading volume increased to 3.2 billion shares from 2.7 billion shares two weeks ago but the average daily trading value remained firm at RM2.7 billion.
Net sell from foreign institutions was RM498 million while net buys from local institutions and local retail were RM487 million and RM12 million respectively.
In the FBM KLCI, gainers outpaced decliners 11 to three. The top three gainers were Westports Holdings Bhd (8.1 per cent in a week to RM3.73), MISC Bhd (4.6 per cent to RM6.55) and Petronas Dagangan Bhd (4.1 per cent to RM26.86).
The top three decliners were Dialog Group Bhd (5.1 per cent to RM3.14), Genting Bhd (1.7 per cent to RM8.70) and Hong Leong Financial Group Bhd (1.1 per cent to RM18.00).
Asian markets were generally bullish last week. The Hong Kong Hang Send Index, which fell for weeks has started to rebound and this led to stronger confidence in the Asian markets. European and US markets continued to be bullish. The US Dow Jones Industrial Average rose to its highest level in five months.
The US dollar has slightly strengthened against major currencies. The US dollar Index closed at 94.7 points last Friday as compared to 94.5 points the week before. The Malaysian ringgit remained firm against the US dollar at RM4.06 to a US dollar.
Commodities prices ended generally lower last week. Gold ( COMEX) remained slightly bearish and fell 0.8 per cent in a week to US$1,222.20 an ounce last Friday, the lowest level in a year. Crude oil rebounded and closed 1.9 per cent higher to US$74.39 a barrel. Back home, crude palm oil futures declined 0.4 per cent in a week to RM2,185 per metric tonne last Friday.
The FBM KLCI closed higher for the third week. The index aims to test the next resistance level at 1,790 points and a breakout above this level could build stronger market confidence. The immediate support level is at 1,710 points.
Technically, the FBM KLCI remained bullish in the short term above the short term 30-day moving average and is now approaching the long term 200-day moving average at 1,790 points. Furthermore, the index is now testing the Ichimoku Cloud resistance level between 1,760 and 1,790 points. The Cloud continues to tighten and this indicates less resistance.
Momentum continued to strengthen as the RSI, MACD and Momentum Oscillator indicators trend upwards. The RSI and Momentum Oscillator have not move towards their overbought levels and this indicates that there is still room for the index to climb higher.
Technical indicators on the chart shows good support for the current bullish trend that started from a rebound three weeks ago. Furthermore, bullish markets performances globally helped boost market confidence to find opportunities on stocks that fell after the general election.
Therefore, the bullish trend is expected to extend and the FBM KLCI to test the resistance level at 1,790 points.
There is a support at 1,748 points in the past two weeks and hence the index may remain bullish as long as the index stays above this 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.