Weekly Recap

U.S. stockmarkets has taken a mild pullback after posting strong gains two weeks ago, the Dow slid 24.28 pts on Monday, led by further selldown among energy shares like Exxon Mobil Corp. and Chevron Corp amid lower crude oil prices. However, market sentiments turned positive as the Republicans won their first Senate majority in eight years, coupled with the drop in jobless claims by 10,000 to 278,000 for the week ended 1st Nov that sent Wall Street towards a record closing; the Dow gained 17.60 pts, 100.69 pts and 69.94 pts to 17,383.84 pts, 7,484.53 pts and 17,554.47 pts over the following three trading days respectively. After the strong recovery, the Dow extended its record closing towards the 17,573.93 pts (+19.46 pts) on Friday as the jobless rate declined to a six-year low of 5.8%. On the weekly chart, the Dow gained 183.41 pts.

Although market sentiments on Wall Street were broadly positive last week, it did not spur any strong buying interest on our local stockmarket as investors continue to sell O&G stocks, namely SapuraKencana (-9.7% W.o.W) and Petronas Dagangan (-3.8% W.o.W) amid the declining crude oil prices. After trading near the 1,860 level on Monday, selling pressure emerged and the FBM KLCI ended lower at 1,853.34 pts (-1.81 pts). Despite the positive tone on Wall Street, the selling pressure on the FBM KLCI persisted and the key index declined 5.98 pts, 8.07 pts and 7.31 pts to 1,847.36 pts, 1,839.29 pts and 1,831.98 pts over the next three trading days respectively. The key index lost 30.96 pts to 1,824.19 pts last week.

FBM KLCI Weekly Technical Readings

The weekly MACD Line is hovering below zero, while the weekly RSI is trending lower below 50.

Despite the daily MACD Line above zero, the daily MACD Histogram is weakening. The daily RSI has crossed below 70.

FBM KLCI Support & Resistance

Once again, the FBM KLCI headed lower and ended below the 1,840 level as O&G stocks were hammered down. Both the MACD and RSI are suggesting that the short term momentum is still negative; the FBM KLCI may continue its downward course towards the support zone of the 1,800-1,820 levels. Meanwhile, the FBM KLCI’s upsides will be capped around the 1,850-1,860 levels.

Moving Forward

Although Wall Street managed to mark new highs last week, the pace was slower than the rebound two weeks ago. The Dow could be overbought and slightly toppish and the upsides may be limited to around the 18,000 level. Meanwhile, as the FBM KLCI traded lower for five consecutive days, share prices on Bursa Malaysia could still be on a consolidation phase. However, traders may take note of GST-related and Technology sectors to look for buying opportunities.

Sector focus

The Technology index has stabilised around the support of 18.38 pts. The MACD Line is approaching zero, but the RSI is slightly overbought. Monitor for a consolidation breakout above 18.8, targeting the 19.5-20.0 levels.

Stocks to focus

GTRONIC – Price has consolidated sideways slightly above the EMA60 level. As the MACD Line is trending higher above zero, monitor for a breakout above the RM4.62 level. Price target will be pegged around the RM5.20 level. Support will be located around the RM4.24 level.

WILLOW – Price has surged above the RM0.87 level with improved volumes. The MACD Histogram has turned green, but the RSI is overbought. Price may rally higher towards the RM0.96 level after a short consolidation. Support will be located around the RM0.85 level.

Source: M+ Online Research - 10 Nov 2014