Weekly Recap

Wall Street ended on a weaker tone at the start of last week after the ISM’s factory index was little changed at 58.7 last month, while China’s official factory index fell to 50.3 in November - the Dow lost 51.44 pts to 17,776.80 pts on Monday. However, buying interest picked up and the key index rebounded, led by biotech and energy shares on the back of the short technical rebound in crude oil prices – the Dow climbed 102.75 pts and 33.07 pts to 17,879.55 pts and 17,912.62 pts on Tuesday and Wednesday respectively. After taking a short breather on Thursday, the uptrend resumes toward a new record closing of 17,958.79 pts (+58.69 pts) on Friday as employers in the U.S. added 321,000 jobs in November. On a W.o.W basis, the Dow jumped 130.55 pts.

Meanwhile, lower crude oil price has triggered a massive selldown on the Malaysian stockmarket last week. The FBM KLCI plummeted 42.62 pts to 1,778.27 pts

on Monday – led by SapuraKencana (-10.4% W.o.W) and Petronas Gas (-7.2% W.o.W). Despite a minor rebound on Tuesday, which the key index ended at 1,785.97 pts (+7.70 pts) - led by selected banking heavyweights, strong selling pressure emerged and the FBM KLCI declined another 27.82 pts and 12.46 pts to 1,758.15 pts and 1,745.69 pts on Wednesday and Thursday respectively as investors were concerned that the impact of the current crude oil price may affect the Malaysian economy. Also, the Malaysian Ringgit ended at five-year low against the US Dollar at 3.4713. Overall last week, the FBM KLCI plunged 71.52 pts.

FBM KLCI Weekly Technical Readings

Last week, the weekly MACD Histogram has turned red, in tandem with the MACD Line. The RSI has tripped below 30.

Similarly, the daily MACD Indicator trended lower over the past trading week. The RSI is hovering below 50.

FBM KLCI Support & Resistance

The FBM KLCI violated the 1,800 level and the key index further declined below the 1,770 level. With both the MACD and RSI suggesting that the momentum is negative, the FBM KLCI may continue its downtrend towards the support of the 1,700-1,720 levels. Meanwhile, should there be any rebound, the FBM KLCI’s upsides could be capped around the 1,770-1,800 levels.

Moving Forward

As Wall Street advanced to record closings, investors could be staying cautious and profit taking activities may emerge - the Dow may pullback towards the 17,400 level. Meanwhile, on the local front, share prices may be due for a technical rebound as the selling activities recently may have been overdone. Hence, traders may bargain hunt among oversold stocks within the O&G counters. Also, trading interest is likely to pick up within export-related companies as the Ringgit may weaken further.

Sector focus

The Trading/Services index has rebounded around the support of the 228 level. The MACD Histogram has turned green, while the RSI is hovering within between the 30-50 levels. Resistance will be located around the 234-237 levels.

Stocks to focus

PANTECH – Price has rebounded around support of the RM0.765 level. The MACD Histogram has turned green, while the RSI is oversold. Price may rebound towards the RM0.87-RM0.905 levels. Support will be located around the RM0.75 level.

TMCLIFE – Price rebounded off the RM0.45 level, forming a hammer candle on the weekly chart. The weekly MACD Histogram, however, extended another red bar. Nevertheless, the RSI is hovering above 50. Monitor for a breakout above the RM0.525, targeting the RM0.585-RM0.63 levels. Support will be pegged around the RM0.44 level.

Source: M+ Online Research - 8 Dec 2014