Weekly Recap

U.S. equities traded higher at the start of last week, led by technology counters like Apple Inc. and Intel Corp - the Nasdaq marked a new high above the 5,000 level at 5,008.10 pts and the Dow jumped to a record closing of 18,288.63 pts (+155.93 pts). However, profit taking activities soon emerged as investors focused on the ECB stimulus details and jobs report announcement on Friday; the key index fell 85.26 pts and 106.47 pts to 18,203.37 pts and 18,096.90 pts over the next two trading days respectively. Following the Dow’s mild rebound of 38.82 pts on Thursday, strong selling pressure was noted on Friday as renewed speculation of a faster-than-expected hike in interest rates took hold after the better-than-expected jobs report that showed unemployment rate falling to 5.5%. The Dow dived 278.94 pts to 17,856.78 pts on Friday. Over the week, the key index declined 275.92 pts.

Meanwhile, share prices on Bursa Malaysia trended negatively at the start of the week led by oil & gas heavyweights amid lower WTI crude oil prices of below US$50 per barrel – the FBM KLCI fell 4.08 pts to 1,817.13 pts on Monday. However, tracking the positive performance on Wall Street, the key index rebounded 4.12 pts and 4.29 pts to 1,821.25 pts and 1,825.54 pts on Tuesday and Wednesday respectively. Nevertheless, the FBM KLCI plunged 19.45 pts to 1,806.09 pts as SapuraKencana (-15.4% W.o.W) was sold down amid the resignation of Tan Sri Dato' Mokhzani Mahathir as Vice-Chairman. On a W.o.W basis, the FBM KLCI lost 14.25 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Histogram has turned red after ten weeks of green bars. The weekly RSI, however, has tripped below 50.

Meanwhile, following the flattish move on the daily MACD Line, it has started to trend downwards. The daily RSI, however, is hovering above 50.

FBM KLCI Support & Resistance

The FBM KLCI has violated the upward trendline last Thursday. Both the daily and weekly MACD indicators are suggesting that the momentum is weaker. If the FBM KLCI breaches below the 1,800 level, selling pressure may pick up and the key index could extend its downward momentum towards the 1,750-1,770 levels. Meanwhile, resistance will be envisaged around the 1,820-1,840 levels.

Moving Forward

Wall Street has taken a beating last week and the Dow dived below the 18,000 level as investors were worried that the Fed will increase interest rates soon-than-expected. Hence, we think that the Dow may pullback further towards the 17,500 level over the near term on profit taking activities. Similarly, share prices on Bursa Malaysia are likely to continue their downtrend this week after the upward trendline violation. Nevertheless, the Technology sector should be focused on the back of weaker Ringgit.

Sector focus

The Technology index continues to rally above the EMA9 level. The weekly MACD Indicator has expanded positively above zero. The weekly RSI, however, is overbought. Resistance will be envisaged around the 21.76-22.74 levels. Support will be set around the 19.61 level.

Stocks to focus

INARI – Price experienced a breakout above the RM3.13 level with high volumes. The MACD indicator continues to trend higher, but the RSI is overbought. Price may resume its uptrend to RM3.30-RM3.60 levels after a short consolidation. Support will be set around the RM3.00 level.

GHLSYS – Price experienced a consolidation breakout above the RM0.85 level with improved volumes. The MACD Histogram has turned green, but the RSI is overbought. Price target will be pegged around the RM0.92-RM1.00 levels. Support will be located around the RM0.83 level.

Source: M+ Online Research - 9 Mar 2015