Weekly Recap

U.S. stockmarkets experienced their biggest volatility in four years as the Dow extended its selloffs by plunging more than 1,000 pts to an intra-day low of 15,370.33 pts on Monday, before paring some losses to end at 15,871.35 pts (-588.40 pts) amid China’s economic growth concern. Follow-through selling pressure continues to weigh on the market as the Dow fell another 204.91 pts to 15,666.44 pts on Tuesday. However, bargain hunting activities returned and the Dow rebounded strongly to end at 16,285.51 pts (+619.07 pts) and 16,654.77 pts (+369.26 pts) on Wednesday and Thursday respectively on the back of the stronger-than-expected revised U.S. GDP which grew at 3.7% in 2Q2015. The Dow managed to advance 183.26 pts last week.

Similarly, share prices on Bursa Malaysia recorded a sharp fall at the start of the week before recovering back above the 1,600 psychological level at the end of the week. The FBM KLCI plunged 42.53 pts to 1,532.14 pts on Monday. However, as soon as the key index dropped to an intra-day low of 1,503 on Tuesday, bargain hunting activities emerged and the FBM KLCI reversed to end at 1,563.94 pts (+31.80 pts), forming a bullish engulfing candle. Further follow-through interest was noted on the banking and oil and gas heavyweights amid the strong recovery in crude oil prices – the key index advanced strongly by 16.43 pts, 21.33 pts and 11.04 pts to 1,580.37 pts, 1,601.70 pts and 1,612.74 pts over the next three trading days respectively. Last week, the FBM KLCI gained 38.07 pts.

FBM KLCI Weekly Technical Readings

The weekly MACD Histogram has turned green. Also, the weekly RSI is oversold and trended higher to 23.2 from 12 two weeks ago.

Meanwhile, the daily MACD Indicator has issued a “Buy” signal, while the RSI is trending higher towards 50.

FBM KLCI Support & Resistance

Selling pressure on the FBM KLCI persisted over the past few weeks and the key index was sold down towards the 1,500 level, but the bargain hunting activities emerged strongly, forming a reversal formation above the 1,500 level. As the daily RSI indicator is recovering from an oversold position, further upsides could be seen towards the 1,660 level. Meanwhile, if the support of the 1,500 level is violated, further support will be seen around the 1,450 level.

Moving Forward

As the U.S. equities ended August 2015 on a negative note, we may expect to see further profit taking activities over the near term on the Dow’s technical rebound phase towards the 17,000-17,600 levels. However, on the local front, share prices on Bursa Malaysia is likely to trend higher on the back of recovering crude oil prices which may lead to renewed buying interest among beaten down oil and gas heavyweights.

Sector focus

The Oil and Gas user-index has trended and rebounded off the 69.5 support level with improving volumes. The MACD Indicator has issued a “Buy” signal, while the RSI has hooked above 30. If the 74.54 level is violated, further upside will be seen around 80.03.

Stocks to focus

BARAKAH – Price ended above the EMA9 level with improved volumes. The MACD Indicator has trended higher, while the RSI has surged above 30. Price may rally towards RM0.92-RM0.96 levels. Support will be seen around the RM0.80 level.

DELEUM – Price has been supported around the RM1.00 over the past three weeks with improved volumes. The MACD Histogram has extended another green bar, while the RSI is recovering from an oversold position. Resistance will be envisaged around RM1.23-RM1.32. Support will be set around RM0.97.

Source: M+ Online Research - 1 Sep 2015