More Selling Pressure Expected

Weekly Recap

U.S. stockmarkets started the week on a weaker tone, led by energy shares as crude oil prices continue to fall below the US$100 level, along with interest hike concerns among investors. The Dow lost 25.94 pts and 97.55 pts to 17,111.42 pts and 17,013.87 pts on Monday and Tuesday respectively. However, buying support emerged as Apple shares were higher with the introduction of iPhone 6 and Apple Pay service; the Dow added 54.84 pts to 17,068.71 pts on Wednesday. Nevertheless, selling pressure resumed on the Dow as investors speculated that the Fed could raise interest rates sooner-than-expected; the key index ended lower at 17,049.00 pts (-19.71 pts) and 16,987.51 pts (-61.49 pts) over the following two trading days. On a W.o.W basis, the Dow declined 149.85 pts.

Despite the negative trading sentiments on Wall Street, the FBM KLCI rebounded at the start of the week, the FBM KLCI rose 2.63 pts and 3.63 pts to 1,871.09 pts and 1,874.12 pts on Monday and Tuesday respectively. The FBM KLCI, however, succumbed to profit taking activities amid lacklustre trades as traded volumes fell below the 3.0 bln mark. The key index fell 3.27 pts to 1,870.85 pts on Wednesday. Tracking the negative performance on Wall Street, further weakness was noted amid the weaker-than-expected industrial production data; the key index ended lower at 1,866.11 pts (-4.74 pts) and 1,855.64 pts (-10.47 pts) on Thursday and Friday respectively. For the week, the FBM KLCI lost 12.82 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Histogram has turned red in tandem with the weekly MACD Line. The weekly RSI continues to trend lower last week to below 50. The daily MACD indicator extended its weakness last week and issued a “Sell” signal. The daily RSI is hovering below 50.

Continued

FBM KLCI Support & Resistance

Following the month-long consolidation on the FBM KLCI to the 1,860-1,880 levels, the key index has violated below the 1,860 level last Friday. With the technical indicators suggesting that the momentum has turned weaker, the FBM KLCI may see further profit taking activities towards the 1,838-1,850 levels. Meanwhile, the resistance zone will be envisaged around the 1,880-1,890 levels.

Moving Forward

With the Dow and S&P 500 ending below the 17,000 and 2,000 psychological levels respectively, U.S. stocks could trend sideways with a negative bias as investors may stay cautious ahead of the FOMC meeting this week. In tandem with the overseas stockmarkets, the FBM KLCI may also see further downside among the heavyweights after the 1,860 level was violated. Nevertheless, some laggards in the property sector could see some trading interest. Sector focus The Properties index rebounded off the EMA20 level and 1,500 psychological levels. The MACD Histogram continues to strengthen last week. However, the RSI indicator is below 50. The properties index may rebound higher towards the resistance of the 1,523 level. Support will be pegged around the 1,500 level.

Stocks to focus

IOIPG – Price experienced a breakout above the RM2.55 level with improved volumes. The MACD Histogram has turned green, but the RSI is slightly overbought Price target will be located around the RM2.77 and RM3.00 levels. Support will be located around the RM2.45 level.

SYMLIFE – Price has trended sideways over the past two weeks. The RSI trended higher towards the 50. Monitor for a breakout above the RM1.20 level, targeting the RM1.33 level. Support will be set around the RM1.15 level.

Source: MalaccaSecurities Research - 15 Sep 2014