Weekly Recap

Wall Street started the week on a cautious mode as traders were focusing on the FOMC meeting and trended in a volatile manner to end last week around the 18,000 points psychological level. The Dow slid 42.17 pts to 18,037.97 pts on Monday, but managed to recoup earlier losses and the key index ended at 18,110.14 pts (+72.17 pts) on Tuesday - ahead of the conclusion of the FOMC meeting on Wednesday. However, the selling pressure picked-up, led by technology and small caps shares, amid the slow U.S. economic growth; the Dow declined 74.61 pts and 195.01 pts to 18,035.53 pts and 17,840.52 pts over the next trading days respectively. Nevertheless, the key index climbed 183.54 pts to 18,024.06 pts on Friday, limiting the Dow’s weekly lost to just 56.08 pts.

Meanwhile, following a six-week rally, share prices on Bursa Malaysia faced with heavier selling pressure on the back of the selloff of banking and oil and gas heavyweights. The FBM KLCI fell 3.00 pts and 4.52 pts to 1,859.58 pts and 1,855.06 pts on Monday and Tuesday respectively, led by banking heavyweights like CIMB (-3.1% W.o.W) and Maybank (-2.2% W.o.W). As selling activities within the small caps and ACE market intensified, the market breadth turned increasingly negative and the FBM KLCI ended lower at 1,842.93 pts (-12.13 pts) on Wednesday. The FBM KLCI pulled further back below the 1,840 level as oil and gas heavyweights traded lower on profit taking activities as the WTI crude oil prices approached the US$60 barrel mark. On a W.o.W basis, the FBM KLCI plunged 44.31 pts at 1,818.27 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Histogram has turned red, but the RSI is hovering above 50.

The daily MACD Histogram has extended a series of red bars after the MACD Line crossed below the daily Signal Line last Tuesday. The RSI is hovering below 50.

FBM KLCI Support & Resistance

After attempting to breakout above the 1,860 level, selling activities took over and the key index pulled back below the EMA20, followed by another dive below the 1,840 level. With the daily indicators indicating that the momentum is negative, a further extension of the retracement might be seen towards the 1,800-1,820 levels over the near term. Meanwhile, the resistance will be pegged around 1,840.

Moving Forward

U.S. stockmarkets could have a positive bias trend ahead as the Dow ended mildly above the 18,000 psychological level. Also, the S&P 500 could be retesting its all-time-high of the 2,125 level over the near term as follow-through buying interest was seen above 2,100. Meanwhile, share prices on Bursa Malaysia may perform a technical rebound formation after the key index faced strong selling activities last week. Traders may look out for oversold Small Caps and ACE Market shares to trade.

Sector focus

The Industrial Product index could be testing the support near the 136 level. The MACD indicator, however, has issued a “Sell” signal. Nevertheless, the RSI is hovering above 50. Monitor for a consolidation around the 136 level and the index may rebound towards the resistance of the 141 level.

Stocks to focus

EWEIN – Price experienced a flag formation breakout above the RM0.785 level. The MACD Indicator has expanded positively above zero. Price may rally towards the RM0.85-RM0.90 levels. Support will be set around RM0.75.

CCM – Price trended sideways between the RM1.06-RM1.13 levels over the past month. The MACD Histogram has turned green. Monitor for a breakout above the RM1.13 level, targeting the RM1.26 level. Support will be anchored around the RM1.06 level.

Source: M+ Online Research - 5 May 2015