Weekly Recap

Wall Street started the week on a mild upward movement as investors were cautious ahead of the corporate results among technology shares - the Dow rose marginally by 13.96 pts to 18,100.41 pts on Monday. However, as weaker-than-expected corporate results from IBM, Microsoft and Apple Inc. were reported, the Dow plunged 181.22 pts and 68.25 pts to 17,919.22 pts and 17,851.04 pts on Tuesday and Wednesday respectively. Follow-through selling interest emerged as commodities like crude oil and metals retreated further and the key index ended lower at 17,731.92 pts (-119.12 pts) and 17,568.53 pts (-163.39 pts) over the next two trading days respectively. On a W.o.W basis, the Dow had fallen 517.92 pts and ended below the 18,000 level. Meanwhile, share prices on the Malaysia’s stockmarket were mostly mixed after the Hari Raya break as index heavyweights traded lower, but the FBM Small Cap (+2.6% W.o.W) and FBM ACE (+6.4% W.o.W) outperformed the market over the week. The FBM KLCI slipped 2.61 pts to 1,724.13 pts on Monday. However, tracking the positive performance on the Dow, buying support emerged on the FBM KLCI, which boosted the key index to 1,736.19 pts (+12.06 pts) on Tuesday. Nevertheless, the FBM KLCI’s profit taking activities resumed near the resistance zone of 1,740; the FBM KLCI declined 6.66 pts, 7.09 pts and 1.68 pts to 1,729.53 pts 1,722.44 pts and 1,720.76 pts over the next three trading days respectively. Last week, the FBM KLCI slid 5.97 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Line continues to stay below the zero level, but the weekly MACD Histogram extended another green bar. The weekly RSI is oversold. Meanwhile, the daily MACD Histogram extended another red bar. Also, the daily RSI has crossed below 50.

FBM KLCI Support & Resistance
The FBM KLCI climbed from the 1,700 level two weeks ago towards the resistance zone of 1,735-1,740 levels last week. However, selling pressure emerged and the FBM KLCI pulled back below the EMA9 level. With both the daily indicators suggesting that momentum is negative, the key index upside’s may be limited around the 1,740 level. Meanwhile, it could retrace lower towards the support of the 1,700 level.

Moving Forward
Wall Street could see more downside over the near term as the Dow has declined below the 18,000 psychological level. If the Dow trips below 17,600, further support will be located around 17,000. Meanwhile, share prices on Bursa Malaysia may see rangebound trading as investors could be cautious on the back of the political uncertainties. If the FBM KLCI falls below 1,700, further support will be set around 1,670. Nevertheless, traders may look for selected uptrend intact shares to trade.

Sector focus

The FBM ACE index continues to climb higher above the 6,400 level after a trendline breakout last week. The MACD Line is approaching zero, while the RSI is above 50. Resistance will be located around 6,664 and 6,851 levels. Support will be set around 6,400.

Stocks to focus

BAHVEST – Price experienced a breakout above the RM0.90 level with high volumes. The MACD Indicator has expanded positively above zero, but the RSI is overbought. Price target will be located around the RM1.02-RM1.06 levels. Support will be set around RM0.89.

SOLUTN – Price surged above the resistance of the RM0.345 level with high volumes. The MACD Histogram has turned green, but the RSI is overbought. Price may rally towards the RM0.40 level after a mild consolidation. Support will be located around RM0.335.

Source: M+ Online Research - 27 Jul 2015