Weekly Recap

U.S. equities started the week on a negative tone as energy shares declined after the WTI crude oil prices retreated from a five-month high of US$62.58 per barrel, causing the Dow to decline 85.94 pts, 36.94 pts and 7.74 pts to 18,105.17 pts, 18,068.23 pts and 18,060.49 pts over the first three trading days. However, bargain hunting activities emerged as technology stocks rallied amid the weaker Dollar; the Dow jumped 191.75 pts to 18,252.24 pts on Thursday. Further follow-through buying interest was noted as investors speculated that the Fed would put the interest rates hike on hold for the time being after an unexpected drop in consumer confidence and weak factory output; the Dow rose 20.32 pts to 18,272.56 pts, while the S&P closed at record high of 2,122.70 pts on Friday. On a W.o.W basis, the Dow added 81.45 pts.

Meanwhile, after a two-week correction phase, buying support emerged near the

1,800 psychological level. The FBM KLCI started the week with a marginal drop of 2.16 pts to 1,805.49 pts on Monday, followed by another 6.88 pts fall to 1,798.61 pts on Tuesday on the back of profit taking activities within the oil & gas heavyweights. However, as buying interest picked up after a selldown below 1,800, the FBM KLCI rebounded to end higher at 1,803.02 pts (+4.41 pts) and 1,807.55 pts (+4.53 pts) over the next two trading days respectively. As Malaysia’s GDP grew at a faster pace of 5.6% in 1Q2015, the FBM KLCI added 4.37 pts to 1,811.92 pts on Friday. The key index rose 4.27 pts last week.

FBM KLCI Weekly Technical Readings

Despite the weekly MACD Line hovering above zero, the weekly MACD Histogram has extended another red bar. The weekly RSI has dropped below 50.

The daily MACD Histogram, however, has turned green, while the daily RSI has hooked above 30.

FBM KLCI Support & Resistance

Bargain hunting activities were noted after the FBM KLCI tripped marginally below the 1,800 level and the MACD Histogram has turned green over the past three trading days – suggesting that the momentum is picking up. The immediate support will be located around the 1,800 level, followed by the 1,770 level. Meanwhile, if the FBM KLCI surged above 1,820, further resistance will be envisaged around the 1,840 level.

Moving Forward

Wall Street is trading on a positive sentiment as the Dow and S&P are located near their all-time-high zone respectively and traders may be taking this opportunity to trade stocks that are on the verge of a breakout formation. Meanwhile, stocks on Bursa Malaysia are just picking up buying momentum after the retracement two weeks ago. Investors and traders will be advised to accumulate counters within the lower liners and small caps stocks that are oversold.

Sector focus

The FBM ACE index has rebounded off the EMA60 level. The MACD Indicator has trended higher, while the RSI has crossed above 30. Monitor for a breakout above the 7,058 level, targeting the 7,349 level. Support will be set around the 6,858 level.

Stocks to focus

MIKROMB – Price experienced a breakout above the RM0.395 level with higher-than-average volumes. The MACD Histogram extended another green bar. Price target will be envisaged around the RM0.435 and RM0.50 levels. Support will be located around the RM0.365 level.

EDUSPEC – Price experienced a sideways consolidation breakout above the RM0.38 level with improved volumes. The MACD Histogram extended another green bar, while the RSI has crossed above 30. Price may rally towards the RM0.43-RM0.47 levels. Support will be pegged around the RM0.355 level.

Source: M+ Online Research - 18 May 2015