Weekly Recap

U.S. stockmarkets trended sideways last week as investors and traders speculating on “when” and “how much” the interest rates will be hiked by the Fed. The Dow started the week on a slightly positive tone, adding 26.32 pts and 13.51 pts to 18,298.88 pts and 18,312.39 pts on Monday and Tuesday respectively, also marking all-time-high closing led by Apple Inc. The Dow, however, retreated from the peak as profit taking activities emerged, sending the key index lower to 18,285.40 pts (-26.99 pts) on Wednesday amid a selloff in airlines stock like Southwest Airlines Co. Following a flattish trade, where the Dow ended at 18,285.74 pts (+0.34 pts) on Thursday, selling pressure resumed and the Dow declined 53.72 pts to 18,232.02 pts on Friday. On a W.o.W basis, the Dow slipped 40.54 pts.

Meanwhile, the FBM KLCI traded on an extended technical rebound at the start of the week, but selling pressure emerged and the FBM KLCI ended below the 1,800 level for the week. The FBM KLCI rose 11.58 pts to 1,823.50 pts on Monday, led by buying support within the oil and gas index heavyweights. However, profit taking activities were seen on Petronas related stocks after it announced a delay to the completion of the RAPID project to mid-2019 – the FBM KLCI declined 13.78 pts to 1,809.72 pts on Tuesday. After a marginal technical rebound on Wednesday, the correction phase resumed on the key index and it plunged 15.07 pts and 7.54 pts to 1,795.04 pts and 1,787.50 pts on Thursday and Friday respectively after the 11th Malaysia plan was announced. Last week, the FBM KLCI shed 24.42 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Indicator has issued a “Sell” signal, while the weekly RSI continues to trend below the 50 level.

The daily MACD Histogram has turned red, while the daily RSI is hovering below 50.

FBM KLCI Support & Resistance

Despite the buying support two weeks ago, which supported the FBM KLCI towards the 1,820 level, the selling pressure resumed and the FBM KLCI index dropped below the 1,800 level – forming a bearish flag pattern. Also, with the weekly indicators suggesting that the momentum is negative, the key index may decline towards the support of the 1,770 level. Meanwhile, if the FBM KLCI surge above the 1,800 level, the resistance will be pegged around the 1,820 level.

Moving Forward

As Wall Street is trading near the all-time-high zone, traders might look for opportunities to take profit, instead of exposing themselves further in an uncertain market environment. Meanwhile, share prices on Bursa Malaysia are likely to see further selling activities after the 1,800 psychological level was violated last week. Nevertheless, traders may lookout for trading ideas if the stock is hovering above the EMA9 and EMA20 levels.

Sector focus

The Industrial Product index has rebounded off the near term support of 138. The MACD Line is hovering above zero, while the RSI has crossed above 50. Resistance will be located around the 142 level. Further support will be set around the 135 level.

Stocks to focus

EWEIN – Price continues to stay above the EMA9 and breached above the RM1.00 level on Friday. The MACD Line is pointing upwards, but the RSI is overbought. Price could rally towards the RM1.20-RM1.30 levels after a short consolidation. Support will be pegged around the RM0.95 level.

DNONCE – Price experienced a breakout above the RM0.445 level with improved volumes. The MACD Indicator has expanded positively above zero, while the RSI is hovering above 50. Price target will be envisaged around the RM0.50-RM0.58 levels. Support will be anchored around the RM0.42 level. 

Source: M+ Online Research - 25 May 2015