Weekly Recap

After Wall Street traded positively towards the 18,000 level two weeks ago, the bulls gave way to the bears and the Dow and S&P 500 plummeted as panic and fear were seen following the crude oil price fall to below US$60 per barrel. The Dow declined 106.31 pts, 51.28 pts and 268.05 pts to 17,852.48 pts, 17,801.10 pts and 17,533.15 pts over the first three trading days respectively, led by Exxon Mobil Corp. and Chevron Corp. last week. However, mild bargain hunting activities were noted and the Dow rebounded 63.19 pts to 17,596.34 pts on Thursday, on the back of better-than-expected retail sales data. Nevertheless, the selling pressure resumed and the Dow plunged 315.51 pts to 17,280.83 pts on Friday. On a W.o.W basis, the key index dived 677.96 pts.

Similarly, share prices on Bursa Malaysia trended lower as most oil and gas heavyweights faced fresh selling pressure amid the extended down-trending of crude  oil prices to below the US$60 mark. The FBM KLCI started the week on a weaker tone – the key index fell 8.53 pts and 2.74 pts to 1,740.84 pts and 1,738.10 pts on Monday and Tuesday respectively. The FBM KLCI, however, rebounded strongly on the back of bargain hunting activities among O&G sectors – the FBM KLCI jumped 27.42 pts to 1,765.52 pts on Wednesday. Nevertheless, tracking the negative overnight performance on Wall Street, the FBM KLCI encountered another round of selling pressure and the key index declined 20.95 pts and 11.58 pts to 1,744.57 pts and 1,732.99 pts over the next two trading days.

FBM KLCI Weekly Technical Readings

The weekly MACD indicator continues to suggest that the price has weakened. The weekly RSI continues to hover below 30.

Similarly, the daily MACD Indicator trended lower last week. The RSI is hovering below the 50 level.

FBM KLCI Support & Resistance

After the FBM KLCI violated the 1,770 and the EMA120 levels two weeks ago, it stayed negative below the 1,740 level last week. As both of the weekly MACD and RSI indicators are suggesting that the momentum is still negative, the FBM KLCI may pullback lower towards the support of the 1,700-1,720 levels. Meanwhile, the FBM KLCI’s upside will be limited around the 1,770-1,800 levels.

Moving Forward

Despite the improving jobs data, Wall Street has taken a beating amid lower crude oil prices; investors started to take profit soon after the Dow traded near the 18,000 level. The steep fall may trigger further selling activities among investors. Similarly, the O&G heavyweights on Bursa Malaysia are likely to see weaker trading tone if crude oil prices fall towards the US$50 mark. However, traders may take advantage of the lower oil prices and trade stocks within the aviation sector.

Sector focus

The Gloves index has consolidated sideways over the past two weeks within the range of 18.75 and 20.38 levels. As the RSI is still hovering above 50, the index may trend slightly higher towards the 20.38 level.

Stocks to focus

KOSSAN – Price continues to sustain above the RM4.60 level. With the MACD Line staying above zero and the RSI holding above 50, price may rally towards the RM5.00-RM5.20 levels. Support will be located around the RM4.50 level.

HARTA – Price has surged above the RM6.84 level last week. The MACD Line has crossed above zero, but the RSI is slightly overbought. With the momentum picking up, monitor for a breakout above the RM7.14 level, targeting the RM7.68 level. Support will be pegged around the RM6.60 level.

Source: M+ Online Research - 15 Dec 2014