Weekly Recap

U.S. equities started the week on a negative tone amid lower crude oil prices, which went below the US$60 per barrel mark two weeks ago. The Dow dived 99.99 pts and 111.97 pts to 17,180.87 pts and 17,068.87 pts on Monday and Tuesday respectively. However, the key index rebounded strongly after the Fed concluded on the last FOMC of the year by reiterating that they will be keeping interest rates low over the near term – the Dow soared 288.00 pts to 17,356.87 pts on Wednesday. The Dow extended its upward momentum as bargain hunting activities on energy shares were noted and the key index rose 421.28 pts to 17,778.15 pts on Thursday, while gaining only 26.65 pts to 17,804.84 pts on Friday. The Dow gained strongly by 523.97 pts last week.

Meanwhile, share prices on Bursa Malaysia extended its fall after a downward violation of the 1,700 level on Monday, led by oil and gas heavyweights. The FBM KLCI gapped  down 35.68 pts and 23.37 pts on Monday and Tuesday respectively. The FBM KLCI, however, rebounded as crude oil price rebounded from a low of US$53.60 per barrel. The FBM KLCI O&G heavyweights led the market’s recovery, which boosted the key index to end higher at 1,681.90 pts (+7.96 pts) on Wednesday. The FBM KLCI further gapped-up by 18.05 pts and 16.04 pts to 1,699.95 pts and 1,715.99 pts over the next two trading days respectively as investors gained confidence on the back of higher crude oil prices. Nevertheless, the FBM KLCI lost 17 pts last week.

FBM KLCI Weekly Technical Readings

The weekly MACD Indicator continues to expand downwards. The weekly RSI, however, is hovering below 30 – indicating that the key index is oversold. Meanwhile, the daily MACD Histogram has been strengthening over the past two trading days, while the RSI has crossed above 30.

FBM KLCI Support & Resistance

The FBM KLCI fell below the 1,700 level early last week, but managed to surge above the 1,700 level by end of the week – forming a hammer candle above the 1,680 level. The weekly RSI is suggesting that the key index is oversold and the FBM KLCI may rebound higher towards the 1,740 level. The support will be pegged around the 1,680-1,700 levels.

Moving Forward

With the Fed reassuring that interest rates will be kept at accommodative levels for the time being, investor sentiment have turned positive – the Dow may retest the 18,000 level. Meanwhile, as crude oil prices gained momentum on the back of the recent rebound, we may see an extended rebound among the oil and gas heavyweights like UMWOG, SKPETRO and Petronas-related stocks. Also, export-related stocks will be in focus with the weakening Ringgit.

Sector focus

The Trading/Services index has rebounded over the past three trading days. The MACD Histogram has turned green, while the RSI has crossed above 30. Resistance will be set around the 229 level. Support will be set around the 218 level.

Stocks to focus

MBMR – Price has rebounded off the RM2.60 level with improved volumes. The MACD Line, however, is hovering below zero while the RSI is below 50. Monitor for a breakout above the RM2.80 level, targeting the RM3.00-RM3.10 levels. Support will be located around the RM2.60 level.

SOLID – Price trended higher after retesting the EMA20 level. The MACD Histogram has turned green, while the RSI is hovering above 50. Price target will be envisaged around the RM1.60-RM1.80 levels. Support will be pegged around the RM1.40 level.

Source: M+ Online Research - 22 Dec 2014