Negative Momentum May Pick Up

Weekly Recap

The buying interest subsided on U.S. equities after marking a record level in the previous week above the 17,000 psychological level; selling pressure emerged as investors were concerned that the Fed may increase interest rates earlier-than-expected. This caused the Dow to retreat 44.05 pts and 117.59 pts to 17,024.21 pts and 16,906.62 pts on Monday and Tuesday respectively. However, the Dow managed to recoup its earlier losses and rebounded 78.99 pts to 16,985.61 pts on Wednesday. Nevertheless, renewed selling activities were noted as market sentiments turned negative due to the worries over the financial stability in Portugal – the Dow declined 70.54 pts to 16,915.07 pts on Thursday. On a W.o.W basis, the key index fell 124.45 pts to 16,943.81 pts.

Following the positive tone on Wall Street in the previous week - after the Dow surged above the 17,000 level, share prices on
Bursa Malaysia were firmer and the FBM KLCI increased 7.59 pts and 0.15 pts to 1,892.50 pts and 1,892.65 pts (all-time-high closing) on Monday and Tuesday respectively. However, the FBM KLCI snapped the two-day gains and succumbed to profit taking activities – the key index slipped 1.49 pts to 1,891.16 pts on Wednesday. Despite the merger news of the three financial institution, CIMB-RHB-MBSB, selling pressure on the key index resumed and the FBM KLCI dived to 1,883.15 pts (-9.47 pts) on Friday. The FBM KLCI slid 1.76 pts last week.

FBM KLCI Weekly Technical Readings

The weekly MACD Line has moved slightly lower, but still above the weekly MACD Signal Line. The weekly RSI, however, is hovering above 50.
The daily MACD Line has crossed below Signal Line. The RSI has breached below 50 – indicating that the momentum is weakening.

Source: MalaccaSecurities Research - 14 Jul 2014