Weekly Recap

Wall Street experienced a negative week on the back of the renewed global economic growth concerns, accompanied by the slumped in commodities prices. Despite the Dow starting the week on a positive note, advancing 67.78 pts to 17,545.18 pts amid positive data reported on U.S. homebuilders, the selling pressure emerged and the Dow retreated 33.84 pts and 162.61 pts to 17,511.34 pts and 17348.73 pts on Tuesday and Wednesday respectively on the back of slower growth in China and lower crude oil prices. Further follow-through selling activities were noted as the Dow tumbled to end lower at 16,990.69 pts (-358.04 pts) and 16,459.75 pts (-530.94 pts) over the next two trading days respectively. On a W.o.W basis, the Dow dived 1,017.65 pts.

Once again, share prices on Bursa Malaysia took another round of beating; selling pressure was noted across the index heavyweights and the FBM KLCI plunged

24.28 pts to 1,572.54 pts on Monday. Despite the Ringgit weakening further towards a fresh 17-year low, the FBM KLCI managed to rebound on the back of bargain hunting activities around the 1,560 level – they key index added 7.06 pts and 2.84 pts to 1,579.60 pts and 1,582.44 pts over the next two trading days respectively. Exports related counters like Supermax and Top Gloves were in focused. Nevertheless, the selling interest resumed and the FBM KLCI ended lower 1,577.41 pts (-5.03 pts) and 1,574.67 pts (-2.74 pts) on Thursday and Friday respectively. Last week, the FBM KLCI dived 22.15 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Line expanded negatively below the zero level, while the weekly MACD Histogram extended another red bar. The weekly RSI stayed oversold.

Meanwhile, the daily MACD Histogram extended another green bar, but the daily RSI is oversold.

FBM KLCI Support & Resistance

After the massive selling below 1,670 two weeks ago, the FBM KLCI extended its downward move and revisited the 1,560 support level. Last week, the FBM KLCI has formed a hammer candle, with the weekly and daily RSI indicators suggesting that the FBM KLCI is oversold; the key index may be due for a rebound to the resistance of 1,600, followed by 1,640. If the key index violates below 1,560, however, further support will be seen around 1,500.

Moving Forward

Wall Street may see further downside as the Dow trended below the 17,000 level after a severe correction last week on the back of China’s growth concern and lower crude oil prices. Similarly, share prices on Bursa Malaysia are likely to trend lower amid the negative global sentiments, which damaged the trend since the violation of the 1,700 level in early August. Traders may use EMA9 as a trailing stop loss to protect their positions.

Sector focus

The Construction index has trended lower towards the support around the 241 level. The MACD Histogram has extended another green bar, while the RSI is oversold. Monitor for a breakout above 246, targeting 251 and 260 levels.

Stocks to focus

ECONBHD – Price rebounded off the support of the RM0.79 level with improved volumes on Thursday. The MACD Histogram has extended another green bar, while the RSI is suggesting that the price is oversold. Monitor for a breakout above RM0.85, targeting the RM0.91 and RM1.00 levels.

MUDAJYA – Price has experienced a breakout above the RM0.87 level last week. As both the MACD and RSI indicators are suggesting that the momentum is picking up, price may rebound towards the RM1.00-RM1.05 levels. Support will be located around the RM0.84 level.

Source: M+ Online Research - 24 Aug 2015