Weekly Recap

Wall Street performed strongly at the start of the week as energy shares jumped amid the recovery of crude oil prices; the Dow gained 196.09 pts to 17,361.04 pts on Monday, followed by another round of buying support that boosted the key index higher to 17,666.40 pts (+305.36 pts) on Tuesday. However, the renewed concerns in Eurozone sent worrying signals to investors, resulting in the Dow trending sideways on Wednesday and only inched marginally higher by 6.62 pts to 17,633.02 pts. Nevertheless, trading sentiments stayed positive as Pfizer Inc. announced a $17.0 bln deal to acquire Hospira Inc and coupled with the continuation of the crude oil rebound, the Dow soared 211.86 pts to 17,884.88 pts on Thursday. On the W.o.W, the key index jumped 659.34 pts.

Meanwhile, following the two-day holiday replacement break for the Federal Territory day and Thaipusam, the Malaysian stockmarket traded positively, tracking the strong upward trend on Wall Street amid the recovery in crude oil prices. With the crude oil price surging above the US$50 per barrel mark early last week, oil and gas index heavyweights were focused and traded in the positive territory that led the FBM KLCI hitting an intra-day high of 1,831.41 pts (+50.15 pts), before settling the day at 1,803.02 pts (+21.76 pts) on Wednesday. The key index, however, was mostly sideways on Thursday as traders took the opportunity to take profit and the key index ended flattish at 1,803.21 pts (+0.19 pts). On the weekly chart, the FBM KLCI jumped 31.99 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Histogram extended another green bar as the weekly MACD Line extended its upward movement. The weekly RSI, however, remained below 50.

Similarly, the daily MACD Histogram formed another green bar, but the daily RSI is overbought.  

FBM KLCI Support & Resistance

Although the FBM KLCI has successfully crossed above the 1,800 level last week, the uptrend is still facing another challenge around the downward trendline (~1,820 level). Also, the daily RSI is suggesting an overbought status for the FBM KLCI; the upside might be capped around the 1,820-1,840 levels. Meanwhile, if the key index falls below the 1,770 level, further support will be set around the 1,730-1,750 levels.

Moving Forward

Global stockmarkets have turned from negative to a positive trading environment following the recovery in the WTI crude oil prices as it rebounded from the low of US$43.58 (29th Jan) to US$52.34 (6th Feb); the Dow is likely to retest the 18,000 level. Similarly, share prices on the local front may extend its short term uptrend and the FBM KLCI may trade higher to 1,840 level as oil and gas stocks may see further trading interest. Traders may use EMA9 as a reference to take profit on uptrend shares.

Sector focus

The Consumer index has extended its upward momentum and holding above the EMA9 last week. The MACD Histogram has turned green, but the RSI is overbought. Resistance will be envisaged around the 586-592 levels, while the support will be located around the 570-573 levels.

Stocks to focus

PWROOT – Price has surged above the EMA20 level after being supported along the RM1.40 level over the past two months. The MACD Line is approaching the zero level, while the RSI has crossed above 50. Price target will be envisaged around the RM1.65-RM1.79 levels. Support will be located around the RM1.35 level.

SASBADI – Price ended above the EAM120 level with improved volumes. The MACD indicator is trending higher, while the RSI is hovering above 50. Resistance will be pegged around the RM1.74 level. Support will be set around RM1.40.

Source: M+ Online Research - 9 Feb 2015