Sideway Trend To Persist Amid Lackluster Trades

Weekly Recap

Following the public holiday on Monday in the U.S., Wall Street traded slightly lower, led by energy producers despite the ISM’s manufacturing data unexpectedly rose to 59 (+1.9 M.o.M) in August 2014. The Dow fell 30.89 pts to 17,067.56 pts on Tuesday. However, mild buying interest boosted the Dow higher to 17,078.28 pts (+10.72 pts) on Wednesday. Nevertheless, market sentiment turned negative on Wall Street amid a surprised move by the ECB, reducing its interest rates to record low; the Dow reversed from the intra-day high of 17,161.55 pts to end lower at 17,069.58 pts (-8.7 pts) on Thursday. After the U.S. nonfarm payrolls grew slower-than-expected in August, the key index jumped 67.78 pts to 17,137.36 pts on Friday. Overall, the key index advanced 39.08 pts last week.

Meanwhile, share prices on Bursa Malaysia kicked off the week on a marginally higher note after the National Day holiday on Monday – the FBM KLCI inched up higher by 1.58 pts to 1,867.69 pts on Tuesday. Despite the positive trading sentiment on Wall Street, the key index declined marginally by 2.82 pts to 1,864.87 pts on Wednesday as profit taking activities resumed on selected heavyweights and lower liners across the board. Nevertheless, the key index managed to rebound off the 1,860 level and recouped earlier losses, boosting the key index to end higher at 1,869.21 pts (+4.34 pts). On a W.o.W basis, the benchmark index trended sideways with marginal gains of 2.35 pts to 1,868.46 pts.

FBM KLCI Weekly Technical Readings

Despite the weekly MACD Line slightly lower, the weekly MACD Histogram extended another green bar. The weekly RSI has hooked above 50.

Meanwhile, the daily MACD Line has been staying flattish below the zero level, while the MACD Histogram has turned red. Nevertheless, the daily RSI is above 50.

Continued

FBM KLCI Support & Resistance

The FBM KLCI trended sideways last week below the EMA60 level. As both the weekly and daily indicators are still suggesting that the momentum is negative, the FBM KLCI may extend its consolidation phase over the near term. Support zones will be located around the 1,850-1,860 levels. On the other hand, the resistance regions will be pegged around the 1,880-1,890 levels.

Moving Forward

Follow-through buying interest on the U.S. stockmarkets could be seen this week; above the recent resistance of the 17,160 level on the Dow as market sentiments turned positive last Friday amid the fading geopolitical risk in Ukraine. Malaysian stocks, however, may extend their consolidation phase over the near term as investors are still looking for fresh leads to stay invested in the market. Nevertheless, lower liners and small caps may be favourable to short term traders.

Sector focus The FBM Small Cap index has rebounded above the EMA60 level. The MACD Histogram has turned green, while the RSI has crossed above 30. The index may trend higher towards the resistance of the 19,384 level. Support will be located around the 18,470 level.

Stocks to focus

LANDMRK – Price has rebounded off the EMA120 level with improved volumes. The MACD indicator is trending higher. Price could rally higher towards the RM1.52 and RM1.67 levels. Support will be set around the RM1.24 level.

TA – Price has formed a consolidation breakout above the RM0.945 level with improve volumes, forming a bullish candle last Friday. The RSI is approaching 50. Price target will be envisaged around the RM1.00-RM1.06 levels. Support will be set around the RM0.925 level.

Source: MalaccaSecurities Research - 8 Sep 2014