Weekly Recap

Wall Street traded in a volatile manner last week  amid  an  unstable  environment  in which the protest in  Hong Kong intensified. The  Dow  declined  41.93  pts  to  17,071.22 pts  on  Monday  and  retreated  further  to 17,042.90  pts  (-28.32  pts)  and  16,804.71 pts  (-238.19  pts)  over  the  next  two  days respectively as small cap and energy stocks slumped. Soon after the key index dropped to  an  intra-day  low  of  16,674.04  pts  and investors  deemed  that  the  selling  was overdone,  bargain  hunting  emerged;  the key  index  ended  at  16,801.05  pts  (-3.66 pts) on Thursday. With the U.S. jobless rate declining  to  a  six-year  low  of  5.9%,  followthrough buying interest boosted the Dow to close higher at 17,009.69 pts  (+208.64 pts) on Friday. Nevertheless, on a W.o.W basis, the Dow fell 103.46 pts.

Meanwhile,  the  trading  tone  was  mostly positive  on  Bursa  Malaysia,  despite  the protest  in  Hong  Kong.  The  FBM  KLCI bucked  the  weak  trend  and  climbed  5.84 pts  to  1,846.34  pts  on  Monday.  However, following  the  plunge  on  Wall  Street,  the FBM  KLCI  ended  marginally  lower  at 1,846.31  pts  (-0.03  pts)  on  the  back  of some  last  minute  profit  taking  activities  on selected  index  heavyweights  -  after  hitting an  intra-day  high  of  1,854.21  pts  on Tuesday.  Index  heavyweights  succumbed to further selling pressure and the key index declined 0.99 pts and  7.64 pts to 1,845.32 pts  and  1,837.68  pts  on  Wednesday  and Thursday  respectively.  Nevertheless,  the FBM KLCI rebounded mildly to 1,840.82 pts (+3.14  pts)  on  Friday.  For  the  week,  the FBM KLCI added 0.32 pts.

FBM KLCI Weekly Technical Readings

The  weekly  MACD  Histogram  and  the weekly MACD Line extended its downward movement  last  week.  The  weekly  RSI continues to stay below 50.

Despite the daily MACD Line  staying  below zero, the daily MACD Histogram has turned green. The daily RSI has crossed above 30.

FBM KLCI Support & Resistance

The  FBM  KLCI  continues  to  consolidate above  the  1,838  support  level  last  week. However, as the weekly technical indicators are  suggesting  that  the  momentum  is  still weak,  further  downsides  could  be  seen  if the  FBM  KLCI  falls  below  1,838.  The  next supports  will  be  located  around  the  1,800-1,820  levels,  while  the  resistance  will  be envisaged around the 1,860-1,880 levels.

Moving Forward

Following  the  volatile  trading  last  week, investors  may  take  a  cautious  view  on  the stockmarkets.  The  negative  trading momentum  may  still  prevail  over  the  near future as the S&P 500 is trading below the 2,000  psychological level, while the Dow is fluctuating  near  the  17,000  level.

Meanwhile, Bursa Malaysia stocks may see some  mild  technical  rebound  along  the 1,838 level, but  the  upside is limited as  the weekly  technical  indicators  are  weaker. Traders  may  trade  within  the  small  caps and fledglings stocks.

Sector focus

The  FBM  Fledgling  index  has  pulled  back below  the  EMA20  level  and  could  further consolidate  around  the  EMA60  level.  The MACD indicator is turning weaker, while the RSI  is  below  50.  Resistance  will  be  set around  the  16,838  level.  Support  will  be located around the 16,094 level.

Stocks to focus

GHLSYS  –  Price  experienced  a  flag formation breakout above the RM1.29 level. The  MACD  indicator  is  improving,  but  the RSI is overbought.  Price may rally towards the RM1.50 level after a short consolidation. Support will be located around the RM1.23 level.

SMPC  –  Price  has  surged  strongly  last week  with  high  volumes.  The  MACD indicator has issued a “Buy” signal. Monitor for  a  breakout  above  the  RM1.00  level. Price  target  will  be  envisaged  around  the RM1.15-RM1.20  levels. Support  will be set around the RM0.955.

Source: M+ Online Research - 7 Oct 2014