Weekly Recap

Once again, U.S. stockmarkets extended their downward movement as commodities players were hit by lower crude oil prices (WTI crude oil plunged last week to end at US$43.75 per barrel). The Dow started the week on a negative tone, falling 91.66 pts to 17,598.20 pts on Monday, followed by another drop of 47.51 pts to 17,550.69 pts on Tuesday. After the Dow trended flattish at 17,540.47 pts (-10.22 pts) on Wednesday amid better-than-estimated earnings from technology companies, the key index withstood another round of selling interest – the Dow lost 120.72 pts to 17,419.75 pts on Thursday. Despite the unemployment rate holding at a seven-year low of 5.3%, the Dow ended lower at 17,373.38 pts (-46.37 pts) on Friday, marking a seven consecutive day of losses. On a W.o.W basis, the Dow plunged 316.48 pts.

Meanwhile, share prices on Bursa Malaysia had a fairly good start last week as foreign funds emerged on Monday, boosting the FBM KLCI higher to 1,744.19 pts (+21.05 pts) led by telco heavyweights like Axiata and Maxis, which rose 7.5% and 7.9% respectively on Monday. However, the buying support was shortlived and the key index declined 20.46 pts to 1,723.73 pts on Tuesday. After a flattish closing at 1,725.56 pts (+1.83 pts) on Wednesday, the downward trend resumed and the FBM KLCI plummeted 30.92 pts and 11.99 pts to 1,694.64 pts and 1,682.65 pts over the next two trading days respectively as the Ringgit fell to a fresh 17-year low against the U.S. Dollar. The FBM KLCI lost 40.49 pts last week, the worst performing week since April.

FBM KLCI Weekly Technical Readings

The weekly MACD Histogram has turned red, in tandem with the weekly MACD Line’s movement. The weekly RSI, however, is oversold. Meanwhile, the daily MACD Indicator has issued a “Sell” signal, while the daily RSI is hovering below 50.

FBM KLCI Support & Resistance

After the FBM KLCI rebounded off the 1,700 level for the third time over the past six weeks, the FBM KLCI has tripped below the 1,700 psychological level again, forming a bearish candle on the weekly chart. With the daily indicators suggesting that the momentum is weakening, the FBM KLCI may pull back further towards the support of 1,670. Meanwhile, the resistance will be located around the 1,700-1,720 levels.

Moving Forward

With crude oil prices staying below the US$50 per barrel mark, Wall Street could still be struggling to see a resumption of the buying support as the Dow is currently trading below the 18,000 psychological level. Meanwhile, share prices on Bursa Malaysia are likely to extend its downward spiral position after a short technical rebound as it has violated below the 1,700 psychological level. Nevertheless, traders could still look into uptrend intact counters within the export-related shares to trade.

Sector focus

The Consumer Products index has pulled back towards the EMA120 level. The MACD Indicator has issued a “Sell” signal, but the RSI is above 50. The index may rebound towards the 594 and 600 levels over the near term. Support will be set around the 588 level.

Stocks to focus

TAKASO – Price rebounded off the EMA9 level with high volumes. The MACD indicator has expanded positively above zero, but the RSI is slightly overbought. Price target will be envisaged around the RM0.665 and RM0.74 levels. Support will be pegged around the RM0.525 level.

NTPM – Price experienced a trendline breakout above the RM0.725 level with higher-than-average volumes. The MACD indicator expanded positively above zero. Price may rally towards the RM0.875 and RM1.00 levels. Support will be set around RM0.70 level.

Source: M+ Online Research - 10 Aug 2015