Weekly Recap

Wall Street reopened after the Memorial Day holiday on a weaker note as energy shares retreated amid the pullback of WTI prices to below US$60 per barrel – the Dow plunged 190.48 pts to 18,041.54 pts on Tuesday. However, the key index rebounded 121.45 pts to 18,162.99 pts on Wednesday, led by technology shares like Apple Inc. and Microsoft Corp. Nevertheless, as sentiments were clouded by concerns over Greece’s debts and the U.S. economic data, selling pressure remained and the Dow fell 36.87 pts to 18,126.12 pts on Thursday. Follow-through selling activities were noted as the Dow declined another 115.44 pts to 18,010.68 pts on Friday. On a W.o.W basis, the Dow has fallen 221.34 pts.

Meanwhile, share prices on Bursa Malaysia started the week on a negative tone as the FBM KLCI traded below the 1,770 level – the selling pressure intensified as foreign funds were reducing their positions on selected index heavyweights. The FBM KLCI plunged 20.12 pts to 1,767.38 pts on Monday, followed by another round of profit taking activities within banking stocks like Public Bank (-3.3% W.o.W) and the key index ended lower at 1,764.07 pts (-3.31 pts) and 1,755.05 pts (-9.02 pts) over the next two trading days respectively. After a mild rebound of the key index to 1,755.56 pts (+0.51 pts) on Thursday, selling activities resumed – the FBM KLCI declined 8.04 pts to 1,747.52 pts on Friday. Last week, the key index lost 39.98 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Indicator expanded negatively last week as the weekly MACD Line crossed below zero. Also, the weekly RSI continues to hover below 50.

Meanwhile, the daily MACD Indicator stayed in the negative territory as the daily MACD Histogram extended another red bar. The daily RSI, however, is oversold.

FBM KLCI Support & Resistance

Selling pressure persisted throughout the week after the FBM KLCI tripped below the 1,770 support. With both the weekly and daily indicators suggesting that the momentum is negative, the FBM KLCI may extend its downward course over the near term. Further support will be located around the 1,720-1,730 levels. Meanwhile, if the key index climbs above 1,750, the upside should be seen around the 1,770 level.

Moving Forward

After the Dow failed to surpass the all-time-high zone, its momentum has turned weaker and the key index is likely to enter a pullback phase over the near term. If the Dow crosses below the 17,600 level, support will be seen around the 17,000 level. Similarly, as the FBM KLCI dipped below 1,750, share prices on Bursa Malaysia may trade with downward bias. Nevertheless, traders may look for trading opportunities if share prices hover above their EMA20 levels.

Sector focus

The Industrial Product index trended sideways around the EMA60 level over the past week. The MACD Histogram has turned green, while the RSI is hovering near 50. The index may retest the 140 level. Support will be set around the 136 level.

Stocks to focus

ABRIC – After a two-day pullback, its price has performed a flag formation breakout above the RM0.525 level. The MACD Indicator has expanded positively above zero. The RSI is hovering above 50. Price may rally towards RM0.60. Support will be set around the RM0.50 level.

EVERGRN – Price trended sideways between the RM1.13-RM1.20 levels over the past three weeks. The MACD Histogram has turned green, but the RSI is overbought. Monitor for a breakout above RM1.28, targeting the RM1.40 levels. Support will be anchored around the RM1.13 level.

Source: M+ Online Research - 1 Jun 2015