Weekly Recap

U.S. equities marked another new all-time-high as the Dow and S&P 500 rose on better-than-expected corporate results and investors were buoyed by the jobless rate data released two weeks ago. The Dow added 39.81 pts and 1.20 pts to 17,613.74 pts and 17,614.90 pts on Monday and Tuesday respectively. The Dow, however, declined marginally to 17,612.20 pts (- 2.70 pts) on Wednesday, after six major banks were fined by regulators in an attempted manipulation of the foreign exchange market. Nevertheless, the key index recouped earlier losses amid better-than-estimated Wal-Mart results and gained 40.59 pts to 17,652.79 pts on Thursday. On the W.o.W basis, the Dow increased 60.81 pts and ended at 17,634.74 pts.

With the overseas stockmarkets gaining upward momentum, share price on Bursa Malaysia ended firmer at the start of the week; the FBM KLCI rose 3.74 pts on Monday. However, the market tone turned

negative soon after the EMA9 was tested on Tuesday; profit taking activities emerged and the key index ended lower to 1,825.11 pts (-2.82 pts) on Tuesday and gapped down further to 1,816.24 pts (-8.87 pts) on Wednesday, led by extended selling activities among O&G heavyweights like Petronas Chemical (-7.5% W.o.W) as crude oil price stayed below US$80. Despite Malaysia’s third quarter GDP growing at a pace of 5.6% Y.o.Y, investors were staying cautious with the selling pressure remaining on the key index; the FBM KLCI slid 0.43 pts and 2.02 pts to 1,815.81 pts and 1,813.79 pts on Thursday and Friday respectively. Last week, the FBM KLCI lost 10.4 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Line is below zero, while the weekly MACD Histogram has turned red. The weekly RSI stayed below 50.

Similarly, both the daily MACD Line and the daily RSI are trending lower.

FBM KLCI Support & Resistance
Despite the positive tone on Wall Street, the FBM KLCI violated below the 1,820 level amid lacklustre trade last week. With both the daily MACD and RSI indicators trending lower, the FBM KLCI may continue the downward pressure towards the 1,800 level; further support will be located around the 1,770 level. Meanwhile, resistances will be envisaged around the 1,850-1,860 levels.

Moving Forward
After posting a strong recovery three weeks ago, Wall Street has turned sideways as investors stayed cautious around the all-time-high zones on the Dow and S&P500. Also, Wall Street may move into a consolidation phase as technical indicators are suggesting that the momentum is weaker. Meanwhile, the FBM KLCI may further consolidate at around the 1,800-1,820 levels over the near term. Nevertheless, traders may look for trading opportunities among uptrending stocks.

Sector focus

The Construction index is retracing back towards the 300 level after hitting the recent high of the 313 level. The MACD Histogram continues to extend another red bar. The RSI, however, is hovering above 50. Support will be pegged around the 300 level. Meanwhile, the resistance will be located around the 313 level.

Stocks to focus
MITRA – Price has experienced a flag formation breakout above the RM1.00 level. The MACD Histogram has turned green, while the RSI is above 50. Price target will be envisaged around the RM1.09-RM1.20 levels.

SUNWAY – Price has rebounded off the RM3.16 level with improved volumes last week. Monitor for a breakout above the RM3.27 level, targeting the RM3.47-RM3.55 levels. Support will be located around the RM3.10 level.

Source: M+ Online Research - 17 Nov 2014