Weekly Recap

U.S. equities endured another round of selling pressure at the start of the week on the back of the concerns over China’s stockmarket amid its 10% plunged last week, coupled with the lower crude oil prices - the Dow declined 127.94 pts to 17,440.59 pts on Monday. However, as the Fed commented that the labour and housing markets are improving, bargain hunting activities emerged and the key index ended higher to 17,630.27 pts (+189.68 pts) and 17,751.39 pts (+121.12 pts) over the next two trading day respectively. Nevertheless, the Dow took a pause on Thursday, where the key index ended flat at 17,745.98 pts (-5.41 pts), followed by another drop of 56.12 pts to 17,689.86 pts on Friday. Overall last week, the Dow managed to rebound 121.33 pts.

Meanwhile, share prices on Bursa Malaysia trended lower at the start of the week on the back of negative performance in China’s stockmarkets; the FBM KLCI fell 11.00 pts

to 1,709.76 pts on Monday. The FBM KLCI continues to extend its downward movement amid the rising political jitters and cabinet reshuffling; the key index declined 10.06 pts and 0.71 pts to 1,699.70 pts and 1,698.99 pts on Tuesday and Wednesday respectively. As the key index hit the support around 1,700 level, however, buying interest emerged and the FBM KLCI rose 0.93 pts to 1,699.92 pts on Thursday, followed by a stronger rebound of 23.22 pts to end the week at 1,723.14 pts, supported by banking heavyweights like Maybank and CIMB. On a W.o.W basis, the FBM KLCI added 2.38 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Line has turned flattish, while the weekly MACD Histogram extended another green bar. The weekly RSI is oversold.

Meanwhile, the daily MACD Indicator has issued a “Buy” signal. The daily RSI has hooked above 50.

FBM KLCI Support & Resistance

Once again, the FBM KLCI rebounded off the 1,700 level for the third time over the past month amid of strong buying interest. As both the weekly and daily indicators are recovering, it could be suggesting that the FBM KLCI may rebound higher towards the 1,740 level over the near term. However, if the FBM KLCI trips below the 1,700 psychological level, next support will be anchored around the 1,670 level.

Moving Forward

Despite having a positive trading environment last week, U.S. stockmarkets may see some cautious move as the Dow is on a short term downtrend phase below the 18,000 psychological level. Share prices on Bursa Malaysia, however, may continue its positive momentum from the strong rebound last week. If the FBM KLCI surges above 1,740, further upsides could be envisaged to around 1,770. Trading ideas would still be lingering around export-based companies amid the weaker Ringgit.

Sector focus

The Industrial Product index extended its uptrend and could be retesting the resistance of the 144 level. The MACD Histogram has turned green. The RSI, however, is overbought. Support will be envisaged around 140.

Stocks to focus

SUPERMX – Price experienced a breakout above the RM2.20 level with high volumes, forming the inverted Head and Shoulders pattern. The MACD Indicator expanded positively above zero. Price target will be pegged around the RM3.00 level. Support will be located around RM2.00.

IRCB – Price rebounded off the RM0.87 level with improved volumes. The MACD Indicator has been trending higher above zero, the RSI is hovering above 50 –suggesting that the momentum is intact. Price may rally towards the RM1.00-RM1.10 levels. Support will be envisaged around the RM0.87 level.

Source: M+ Online Research - 3 Aug 2015