Weekly Recap

U.S. stockmarkets traded mildly higher and the Dow ended at 16,817.94 pts (+12.53 pts) on Monday, supported by telco and consumer stocks. The Dow climbed ahead of the FOMC meeting, while corporate earnings were focused which led the Dow to end firmer at 17,005.75 pts (+187.81 pts) on Tuesday. U.S. stocks, however, took a pause as the Fed concluded its bond buying program and keeping interest rates low – the Dow slid to 16,974.31 pts (-31.44 pts) on Wednesday. Nevertheless, the Dow rallied 221.11 pts to 17,195.42 pts on the back of better-than-expected GDP growth of 3.5% in 3Q2014, coupled with stronger results from Visa and MasterCard. Follow-through buying interest further boosted the key index towards the record closing of 17,390.52 pts (+195.10 pts) on Friday, after a surprised move from the BOJ to increase its asset buying program to 80 trillion Yen annually. For the week, the Dow rocketed 585.11 pts.

With the consistent buying support two weeks ago, the FBM KLCI continues to perform strongly and the FBM KLCI rose steadily last week – the FBM KLCI added 4.29 pts and 2.53 pts to 1,823.15 pts and 1,825.68 pts on Monday and Tuesday respectively. Tracking the positive overnight performance on Wall Street, the FBM KLCI gained another 13.87 pts to 1,839.55 pts on Wednesday. Further upticks in the market were supported by the spill over effect from the firmer corporate results and the unexpected increase of its stimulus plan by the BOJ – the FBM KLCI jumped towards 1,842.78 pts (+3.23 pts) and 1,855.15 pts (+12.37 pts) levels over the next two trading days respectively.

FBM KLCI Weekly Technical Readings

The weekly MACD Histogram has extended another green bar, while the weekly RSI stayed above 30.

The Daily MACD Histogram trended higher, while the daily RSI is hovering above 50.

FBM KLCI Support & Resistance

As the FBM KLCI has cleared above the resistance of the 1,840 and 1,850 levels last week amid strong bargain hunting activities, coupled with the short term positive indications from both the daily MACD and RSI indicators, the recent technical rebound phase may extend higher towards the resistance of the 1,880-1,900 levels. Meanwhile, if the FBM KLCI violates below the 1,840 level, the supports will be envisaged around the 1,800-1,820 levels.

Moving Forward

Wall Street has marked new record levels as the BOJ increased the quantum of its stimulus plan; this may favour equities and further buying interest could be seen on the Dow and S&P 500. Meanwhile, tracking the positive U.S. stockmarkets, the FBM KLCI may stay firm, continuing the recent relief rally. Traders may look for opportunities on resistance breakout, or 52-week high trade setups to initiate an entry.

Sector focus

The Construction index has rebounded strongly and the MACD indicator is pointing in the positive direction. The RSI, however, is slightly overbought. The index could be targeting the 313.89 level after a short consolidation. Support will be located around the 285.47 level.

Stocks to focus

PESONA – Price has consolidated sideways over the past two months. The MACD indicator has rebounded last Friday. The RSI has crossed above 50. Monitor for a breakout above the RM0.905 level. Support will be set around the RM0.86 level.

HSL – Price has been sideway-ranging between the RM1.75-RM2.00 levels over the past six months. The MACD Line is above zero, but the RSI is overbought. Monitor for a breakout above the RM2.00 level, targeting the RM2.40 level. Support is set around the RM1.87 level.

Source: M+ Online Research - 3 Nov 2014