Weekly Recap

U.S. stockmarkets traded on a positive tone at the start of the week, led by the banking stocks as optimism grew over corporate earnings within the banking sector – the Dow added 46.34 pts to 18,070.40 pts on Monday. However, U.S. equities took a hit and the Dow declined 142.20 pts and 86.22 pts to 17,928.20 pts and 17,841.98 pts on Tuesday and Wednesday respectively, following the IMF’s comments that it may cut a funding lifeline to Greece. Nevertheless, the Dow managed to recoup earlier losses as buying interest was seen on technology shares before the jobs data on Friday; the Dow surged 82.08 pts to 17,924.06 pts on Thursday, followed by another 267.05 pts to 18,191.11 pts on Friday on the back of a creation of 223,000 jobs in April and the unemployment rate falling to 5.4%. On a W.o.W basis, the Dow added 167.05 pts.

Meanwhile, the Malaysian stockmarket succumbed to selling pressure after the long weekend. After a technical rebound, where the FBM KLCI rebounded 9.15 pts to 1,827.42 pts on Tuesday - led by oil and gas heavyweights, the key index plunged 6.45 pts 15.87 pts to 1,820.97 pts and 1,805.10 pts on Wednesday and Thursday respectively amid the selloffs on selected telco and plantation heavyweights like Axiata (-1.8% W.o.W) and IOI Corp (-3.2% W.o.W). Nevertheless, bargain hunting activities emerged after the key index trended downwards to the intra-week low of the 1,805 level; the FBM KLCI ended at 1,807.65 pts (+2.55 pts) on Friday. Still, the FBM KLCI fell 10.62 pts for the week.

FBM KLCI Weekly Technical Readings

The weekly MACD Histogram has extended another red bar, while the weekly MACD Line declined for another week. The weekly RSI, however, is hovering above 50.

The daily MACD Indicator has trended lower and tripped below zero. Also, the daily RSI continues to stay below 50.

FBM KLCI Support & Resistance

Following the violation below 1,840, the FBM KLCI marked a second consecutive loss on the weekly chart. Based on both the daily MACD and RSI, the negative momentum may persist over the near term. Hence, if the key index breaches below the 1,800 level, support will be located around the 1,770 level. Meanwhile, the immediate resistance will be envisaged around the 1,840 level, followed by the 1,860 level.

Moving Forward

Wall Street is likely to trend higher over the near term as the Dow could be retesting the all-time-high resistance of the 18,300 level after the buying support was strongly seen above the 18,000 level last week. Meanwhile, taking cue from the positive sentiment on the overseas markets, the FBM KLCI could perform a technical rebound over the coming week. Traders may look into counters which are still up trending with steady volumes within the ACE Market and Small Caps indices.

Sector focus

The FBM ACE index is likely to trend higher on a technical rebound as the RSI is suggesting an oversold condition. Also, the MACD Histogram has turned green. The FBM ACE index may rebound towards the 7,126-7,400 levels. Support will be located around the 6,807 level.

Stocks to focus

CONNECT – Price experienced a breakout above the RM0.235 level. The MACD Indicator has trended positively above zero. The RSI is above 50. Price target will be envisaged around the RM0.275 and RM0.32 levels. Support will be set around the RM0.21 level.

MMSV – Price experienced a consolidation breakout above the RM0.76 level with improved volumes. The MACD Histogram extended another green bar. Price may rally towards the RM0.85-RM0.90 levels. Support will be anchored around the RM0.73 level.

Source: M+ Online Research - 11 May 2015